Hersha Hospitality Trust Increases Presence in Southern California and Miami
- Closed on Purchase of Courtyard San Diego Downtown -
- Signed Agreement to Purchase The Residence Inn Coconut Grove, Miami -
PHILADELPHIA -- May 30, 2013
Hersha Hospitality Trust (NYSE: HT), owner of upscale and select service
hotels in major metropolitan markets, announced that the Company has closed on
the purchase of the Courtyard San Diego Downtown and has signed a definitive
agreement to purchase the Residence Inn Coconut Grove in Miami. The purchase
price for the 245-room Courtyard San Diego Downtown and the 140-room Residence
Inn Coconut Grove are $71.1 million and $21.8 million, respectively.
“Both of these acquisitions further the Company’s strategy to invest in high
quality urban transient focused hotels in our selected gateway markets. The
Southern California and Miami markets exhibit strong growth prospects and we
are extremely pleased to have sourced acquisitions that fit the Company’s
highly selective investment criteria. The Company has been extremely
disciplined in its expansion and our strong cash position allows us the
flexibility to acquire these assets at an opportune time in the lodging
cycle,” stated Jay H. Shah, Chief Executive Officer. “Given our strong
position in New York and Boston, increasing our exposure to Miami and Southern
California continues our efforts to leverage high demand, high barrier to
entry international gateways to drive strong revenue and earnings growth in
our portfolio building on our already strong asset value.”
The Courtyard San Diego Downtown is poised to capture strong market share and
rate growth due to the completion of a significant renovation. The Seller
recently completed a $6.4 million renovation of all guest rooms and public
areas earlier this month and no further renovation disruptions are anticipated
at this asset. The hotel is uniquely situated on the north side of the Gaslamp
Quarter within close proximity to the Westfield Horton Plaza Mall and to
strong business demand generators in the city’s Central Business District,
encompassing approximately 11 million square feet of office space. The San
Diego market is also a premier convention location in the Western US, second
only to Las Vegas, and the expansion of the San Diego Convention center in
2016 is expected to further increase demand. Additionally, the San Diego
market has a well-developed tourism infrastructure and its temperate climate
provides year-round leisure transient demand. The purchase price reflects a
first full year economic capitalization rate of approximately 7.0% and an
expected stabilized capitalization rate of approximately 9%.
The Residence Inn Coconut Grove is located in a highly desirable commercial
and residential neighborhood in Miami proximate to the Downtown Brickell
office market and is the closest extended-stay property to the University of
Miami in Coral Cables. The hotel will undergo a significant upgrade starting
in May 2014. This asset is being purchased from a distressed seller and will
significantly benefit from more aggressive asset management and planned
capital investment. The purchase price reflects a trailing capitalization rate
of 7.2%. Post renovation the asset is expected to stabilize at a
capitalization rate in excess of 11%.
The Miami market remains a leading hub for domestic and international
travelers, with consistent year round demand and high barriers to entry for
new supply. The Miami market has been one of the strongest lodging markets in
the country and year to date RevPAR growth is 13.6% through April 2013.
The Company anticipates closing on the Residence Inn Coconut Grove by the end
of the second quarter of 2013. The proposed acquisition is subject to a
variety of closing conditions and as a result, there can be no assurance that
the Company will be able to consummate the acquisition on the schedule or on
the terms described.
HHM will assume management of both the Courtyard San Diego Downtown and the
Residence Inn Coconut Grove.
Both acquisitions will be funded with cash on hand and borrowings from the
Company’s credit facility. The Company anticipates availability of
approximately $200 million of additional investment capital after the
acquisition of the two hotels.
The Company has posted a presentation of supplemental information about the
Courtyard San Diego Downtown and the Residence Inn Coconut Grove acquisition
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 that
owns 65 hotels in major urban gateway markets including New York, Washington,
Boston, Philadelphia, Los Angeles, San Diego and Miami totaling 9,552 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.
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. 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,
2012, filed with the U.S. Securities Exchange Commission.
Hersha Hospitality Trust
Ashish Parikh, 215-238-1046
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