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 - Business Wire 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. Forward-Looking Statements 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. Contact: Hersha Hospitality Trust Ashish Parikh, 215-238-1046 CFO
Hersha Hospitality Trust Increases Presence in Southern California and Miami
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