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Hersha Hospitality Trust Announces Second Quarter 2013 Results



  Hersha Hospitality Trust Announces Second Quarter 2013 Results

                 - Consolidated Hotel RevPAR Improved 3.6% -

        - Same Store Consolidated Portfolio-Wide Occupancy of 82.2% -

          - Same Store Consolidated EBITDA Margins Expand to 42.0% -

Business Wire

PHILADELPHIA -- July 30, 2013

Hersha Hospitality Trust (NYSE: HT, the “Company”), owner of upscale hotels in
urban gateway markets, today announced results for the second quarter ended
June 30, 2013.

Second Quarter 2013 Financial Results

Adjusted Funds from Operations (“AFFO”) in the second quarter increased by
$2.0 million to $28.7 million, compared to $26.7 million for the second
quarter of 2012. AFFO per diluted common share and unit of limited partnership
interest in Hersha Hospitality Limited Partnership (“OP Unit”) was $0.14,
in-line with the same quarter in 2012, due to a higher share count in 2013.
The Company’s weighted average diluted common shares and OP Units outstanding
were approximately 208.1 million in the second quarter 2013, up from
approximately 196.3 million in the comparable quarter in 2012.

Net income applicable to common shareholders was $14.3 million for the second
quarter ended June 30, 2013, compared to net income applicable to common
shareholders of $13.1 million for the comparable quarter in 2012.

“Our portfolio continues to post solid results, with strong occupancy,
particularly in New York, and high absolute margins. Year-to-date RevPAR
growth of 8.0% within our same store consolidated portfolio remains industry
leading. Our year-over-year quarterly RevPAR growth was somewhat muted,
however, as the Company faced tough comparables for transient travel in April
as a result of the Easter holiday shift, a softer convention calendar in
Boston and Philadelphia, as well as the impact from a slowdown in government
travel due to sequestration in our Washington, D.C. metro market.” commented
Mr. Jay H. Shah, the Company’s Chief Executive Officer.

Mr. Shah continued, “We continue to believe that we are extremely
well-positioned to be outsized beneficiaries of the continuing economic
recovery currently underway. We believe that Hersha’s young, urban focused,
and newly refreshed portfolio will benefit from increased transient travel
which is forecasted to be the U.S. lodging industry’s sustained driver of
RevPAR growth in the near-term. The Company will also benefit from its
continued expansion in key gateway markets such as Miami and San Diego and the
disposition of non-core assets. Moving forward, the Company will continue to
focus on disposition opportunities, both to unlock value from capital
recycling within our portfolio and to continue to strategically transition
Hersha as the leading urban focused hospitality REIT in the sector.”

Second Quarter 2013 Operating Results

For the quarter ended June 30, 2013, revenue per available room (“RevPAR”) at
the Company's consolidated hotels, 57 hotels as of June 30, 2013 compared to
53 hotels as of June 30, 2012, was up 3.6% to $142.13 compared to $137.25 in
the prior year period. The Company’s average daily rate (“ADR”) at its
consolidated hotels increased by 3.4% to $174.42, while occupancy at its
consolidated hotels increased by 11 basis points to 81.5%. Hotel EBITDA at the
Company’s consolidated hotels grew approximately 9.9%, or $3.9 million, to
$43.3 million for the quarter ended June 30, 2013 compared to the same period
in 2012. Hotel EBITDA margins were 40.9% in the second quarter 2013 compared
to 41.5% in the same quarter 2012. In addition to a different mix of hotels
within the consolidated portfolio, EBITDA margins were impacted by startup and
pre-opening expenses associated with the Hyatt Union Square, increased
property taxes and insurance costs.

On a same-store basis (51 hotels), RevPAR at the Company’s consolidated hotels
for the quarter ended June 30, 2013 was up 3.7% to $142.24 compared to $137.19
in the prior year period. ADR at the Company’s same-store consolidated hotels
increased by 2.4% to $173.02, while occupancy at same-store consolidated
hotels increased by 103 basis points to 82.2%.

Hotel EBITDA margins at the Company’s same-store consolidated hotels increased
by 30 basis points to 42.0% in the second quarter 2013, and were also impacted
by increased property taxes and insurance costs, which collectively reduced
margins by approximately 55 basis points.

The Company’s top performing markets during the quarter based on RevPAR growth
were the California-Arizona, the Connecticut-Rhode Island and the NY-NJ Metro
markets with RevPAR growth of 11.4%, 9.8% and 8.7%, respectively.

New York City and Manhattan

The New York City hotel portfolio, which includes the five boroughs, consisted
of 16 hotels as of June 30, 2013. For the second quarter 2013, the Company’s
same-store New York City hotel portfolio (14 hotels) recorded a 5.8% increase
in RevPAR to $208.40 as ADR increased 4.7% to $224.72, while occupancy
increased 91 basis points to 92.7%.

The Manhattan hotel portfolio consisted of 13 hotels as of June 30, 2013. For
the second quarter of 2013, the Company’s same-store Manhattan hotel portfolio
(11 hotels) recorded a 2.9% increase in RevPAR to $219.02, as ADR increased
2.1% to $234.77, and occupancy increased 72 basis points to 93.3%.

Financing

As of June 30, 2013, the Company maintained significant financial flexibility
with approximately $29.3 million of cash and cash equivalents and $183.8
million available on its $250 million senior unsecured revolving line of
credit As of June 30, 2013, 92.8% of the Company’s consolidated debt is fixed
rate debt or effectively fixed through interest rate swaps and caps. The
Company’s total consolidated debt has a weighted average interest rate of
approximately 4.85% and a weighted average life-to-maturity of approximately
4.0 years.

In April 2013, the Company received the remaining balance of principal and
accrued interest on the development loan for the Hyatt 48 Lex in the amount of
$2.0 million. With this transaction, the Company no longer possesses any
development loan exposure.

In addition, in April 2013, the Company modified its $30 million loan for the
Courtyard by Marriott Los Angeles, CA. This modification included the option
to advance an additional $5 million in principal, bears interest at a variable
rate of one month LIBOR plus 3.00% and now matures in September 2017.
Furthermore, during the second quarter, the Company repaid $7.9 million on its
outstanding mortgage at the Residence Inn, Tysons Corner, VA.

Acquisitions

During the second quarter, the Company completed two acquisitions of high
quality hotels attractively located in top gateway markets. In May 2013, the
Company closed on the 245-room Courtyard San Diego Downtown for a total
purchase price of $71.0 million. The hotel, which recently completed a $6.4
million renovation of all guest rooms, is uniquely situated on the north side
of the Gaslamp Quarter within close proximity to the city’s Central Business
District, which encompasses approximately 11 million square feet of office
space. Additionally, the San Diego market is a premier convention location,
with the expansion of the San Diego Convention center in 2016 expected to
further increase demand.

In June 2013, the Company acquired the 140-room Residence Inn Coconut Grove in
Miami for $21.8 million. The Residence Inn Coconut Grove is located in a
highly desirable commercial and residential neighborhood in Miami in close
proximity to the Downtown Brickell office market and the University of Miami
in Coral Cables.

Dispositions

The Company continued its efforts to recycle capital from its non-core
portfolio into core, urban transient markets. The Company sold the Comfort Inn
in Harrisburg, PA for $3.7 million in June 2013 and recognized a gain of $1
million from this transaction. Additionally, the Company entered into a
purchase and sale agreement to sell the Holiday Inn Express in Camp Springs,
PA in May 2013 for an aggregate sale price of $8.5 million. A non-cash
impairment charge of $3.7 million was recorded as a result of entering into
the purchase and sale agreement. Results of operations for the Comfort Inn in
Harrisburg, PA and the Holiday Inn Express in Camp Springs, MD have been
reclassified to discontinued operations for the three-month and the six-month
periods ended June 30, 2013 and 2012. The sale of this hotel is subject to
customary closing conditions, including the completion of the buyer’s due
diligence. Accordingly, no assurance can be given that this sale will close on
the terms summarized above or at all.

Outlook for 2013

The Company is maintaining its range of operating expectations for 2013. Based
on management’s current outlook, the Company is re-issuing the following
previously announced operating expectations for 2013:

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

Dividend

For the second quarter 2013, the Company paid a dividend of $0.50 per Series B
Preferred Share and $0.4297 per Series C Preferred Share.

The Company also paid a dividend of $0.06 per Common Share and per OP unit for
the second quarter ended June 30, 2013.

Second Quarter 2013 Conference Call

Hersha will host a conference call to discuss the Company’s financial results
at 9:00 AM Eastern time on Wednesday July 31, 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) 510-1786
or (719) 457-2627 for international participants. A replay of the call will be
available from 12:00 p.m. Eastern Time on Wednesday, July 31, 2013, through
midnight Eastern Time on August 14, 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 2575296. A replay of the webcast will
be available on the Company’s website for a limited time.

About Hersha Hospitality

Hersha Hospitality Trust (HT) is a self-advised real estate investment trust,
which owns interests in 65 hotels totaling 9,616 rooms, primarily along the
Northeast Corridor from Boston to Washington DC. The Company also owns hotels
in Southern California, Northern California, Arizona and Miami, Florida.
Hersha focuses on high quality upscale hotels in high barrier to entry
markets. More information on the Company and its portfolio of hotels is
available on Hersha's Web site 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)
                                                                
                                               June 30,          December 31,
                                               2013              2012
Assets:
                                                                              
Investment in Hotel Properties, net of
Accumulated Depreciation, (including           $ 1,672,120       $ 1,466,713
consolidation of variable interest entity
assets of $86,515 and $86,657)
Investment in Unconsolidated Joint               14,365            16,007
Ventures
Development Loans Receivable                     -                 28,425
Cash and Cash Equivalents                        29,294            69,059
Escrow Deposits                                  33,394            26,792
Hotel Accounts Receivable, net of
allowance for doubtful accounts of $19 and       13,974            11,538
$365
Deferred Financing Costs, net of
Accumulated Amortization of $5,945 and           9,098             8,695
$4,841
Due from Related Parties                         5,776             8,488
Intangible Assets, net of Accumulated            8,251             8,698
Amortization of $3,119 and $2,413
Deposits on Hotel Acquisitions                   16,486            37,750
Other Assets                                     21,304            25,514
Hotel Assets Held for Sale                       8,193             -
                                                                    
Total Assets                                   $ 1,832,255       $ 1,707,679  
                                                                    
Liabilities and Equity:
Line of Credit                                 $ 66,200          $ -
Unsecured Term Loan                              150,000           100,000
Unsecured Notes Payable                          51,548            51,548
                                                                              
Mortgages Payable, including net
Unamortized Premium (including                   649,680           641,160
consolidation of variable interest entity
debt of $56,488 and $57,256)
Accounts Payable, Accrued Expenses and           34,641            33,838
Other Liabilities
Dividends and Distributions Payable              15,949            15,621
Due to Related Parties                           6,139             4,403
                                                                    
Total Liabilities                                974,157           846,570    
                                                                    
Redeemable Noncontrolling Interests -          $ -               $ 15,321
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 June 30, 2013 and 7,000,000       76                70
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, 202,667,646
and 198,672,356 Shares Issued and                2,027             1,986
Outstanding at June 30, 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 Income           577               (1,786    )
(Loss)
Additional Paid-in Capital                       1,196,914         1,178,292
Distributions in Excess of Net Income            (370,709  )       (348,734  )
Total Shareholders' Equity                       828,885           829,828
                                                                    
Noncontrolling Interests:
Noncontrolling Interests - Common Units          29,167            15,484
Noncontrolling Interests - Consolidated          46                476        
Variable Interest Entity
Total Noncontrolling Interests                   29,213            15,960
                                                                    
Total Equity                                     858,098           845,788
                                                                    
Total Liabilities and Equity                   $ 1,832,255       $ 1,707,679  
                                                                              

                                                                              
HERSHA HOSPITALITY TRUST
Summary Results (unaudited)
(in thousands, except shares and per share data)
                                                              
                   Three Months Ended                      Six Months Ended
                   June 30, 2013       June 30, 2012       June 30, 2013       June 30, 2012
Revenues:
Hotel
Operating          $ 106,092           $ 94,785            $ 182,095           $ 158,855
Revenues
Interest
Income from          12                  518                 158                 1,139
Development
Loans
Other Revenue        60                  52                  94                  114          
Total Revenues       106,164             95,355              182,347             160,108      
                                                                                  
Operating
Expenses:
Hotel
Operating            55,765              50,130              103,442             89,849
Expenses
Gain on
Insurance            -                   -                   (403        )       -
Settlements
Hotel Ground         266                 214                 494                 408
Rent
Real Estate
and Personal
Property Taxes       6,425               5,090               13,023              10,122
and Property
Insurance
General and          3,260               3,074               5,868               6,109
Administrative
Stock Based          2,439               2,266               4,827               4,399
Compensation
Acquisition
and Terminated       773                 124                 776                 1,082
Transaction
Costs
Depreciation
and                  16,083              13,924              30,957              27,155
Amortization
Gain on Hotel        (12,107     )       -                   (12,107     )       -            
Acquisitions
Total
Operating            72,904              74,822              146,877             139,124      
Expenses
                                                                                  
Operating            33,260              20,533              35,470              20,984
Income
                                                                                  
Interest             469                 346                 925                 452
Income
Interest             11,138              10,442              21,558              21,925
Expense
Other Expense        350                 287                 584                 522
Loss on Debt         284                 240                 545                 246          
Extinguishment
                                                                                              
Income (Loss)
before Income
(Loss) from
Unconsolidated
Joint Ventures       21,957              9,910               13,708              (1,257      )
Investments,
Income Taxes
and
Discontinued
Operations
                                                                                  
Unconsolidated
Joint Ventures
Income (Loss)
from                 148                 414                 (248        )       (316        )
Unconsolidated
Joint Ventures
Loss from
Remeasurement
of Investment        -                   (224        )       -                   (224        )
in
Unconsolidated
Joint Ventures
Income (Loss)
from
Unconsolidated       148                 190                 (248        )       (540        )
Joint Venture
Investments
                                                                                  
Income (Loss)
before Income        22,105              10,100              13,460              (1,797      )
Taxes
                                                                                  
Income Tax           (1,438      )       -                   (309        )       -            
Expense
Income (Loss)
from                 20,667              10,100              13,151              (1,797      )
Continuing
Operations
                                                                                  
Discontinued
Operations
Gain on
Disposition of       1,043               6,949               1,043               11,452
Hotel
Properties
Impairment of
Asset Held for       (3,723      )       -                   (3,723      )       -
Sale
Income (Loss)
from                 98                  340                 (62         )       (180        )
Discontinued
Operations
(Loss) Income
from                 (2,582      )       7,289               (2,742      )       11,272
Discontinued
Operations
                                                                                  
Net Income           18,085              17,389              10,409              9,475
                                                                                  
(Income) Loss
Allocated to         (210        )       (796        )       463                 (55         )
Noncontrolling
Interests
Preferred            (3,589      )       (3,500      )       (7,433      )       (7,000      )
Distributions
Extinguishment
of Issuance
Costs Upon
Redemption of        -                   -                   (2,250      )       -            
Series A
Preferred
Stock
                                                                                  
Net Income
Applicable to      $ 14,286            $ 13,093            $ 1,189             $ 2,420        
Common
Shareholders
                                                                                  
Earnings per
Share:
BASIC
Income (Loss)
from
Continuing
Operations         $ 0.08              $ 0.03              $ 0.01              $ (0.05       )
Applicable to
Common
Shareholders
(Loss) Income
from                 (0.01       )       0.04                (0.01       )       0.06         
Discontinued
Operations
                                                                                  
Net Income
Applicable to      $ 0.07              $ 0.07              $ 0.00              $ 0.01         
Common
Shareholders
                                                                                  
DILUTED
Income (Loss)
from
Continuing
Operations         $ 0.08              $ 0.03              $ 0.01              $ (0.05       )
Applicable to
Common
Shareholders
(Loss) Income
from                 (0.01       )       0.04                (0.01       )       0.06         
Discontinued
Operations
                                                                                  
Net Income
Applicable to      $ 0.07              $ 0.07              $ 0.00              $ 0.01         
Common
Shareholders
                                                                                  
Weighted
Average Common
Shares
Outstanding:
Basic                198,633,051         186,264,437         197,835,465         178,345,932
Diluted              201,201,337         189,011,990         201,083,900         178,345,932
                                                                                  
                                                                                  

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                      Six Months Ended
                   June 30, 2013       June 30, 2012       June 30, 2013       June 30, 2012
                                                                                  
Net income
applicable to      $ 14,286            $ 13,093            $ 1,189             $ 2,420
common shares
Income (loss)
allocated to         210                 796                 (463        )       55
noncontrolling
interest
(Income) loss
from                 (148        )       (190        )       248                 540
unconsolidated
joint ventures
Gain on hotel        (12,107     )       -                   (12,107     )       -
acquisition
Gain on
disposition of       (1,043      )       (6,949      )       (1,043      )       (11,452     )
hotel
properties
Loss from
impairment of        3,723               -                   3,723               -
depreciable
assets
Depreciation
and                  16,083              13,924              30,957              27,155
amortization
Depreciation
and
amortization         204                 187                 426                 456
from
discontinued
operations
FFO allocated
to
noncontrolling       -                   (139        )       -                   -            
interests in
consolidated
joint ventures
Funds from
consolidated
hotel
operations
applicable to        21,208              20,722              22,930              19,174
common shares
and
Partnership
units
                                                                                  
Income (loss)
from
unconsolidated       148                 190                 (248        )       (540        )
joint venture
investments
Loss from
remeasurement
of investment        -                   224                 -                   224
in
unconsolidated
joint ventures
Depreciation
and
amortization
of purchase          147                 257                 301                 577
price in
excess of
historical
cost
Interest in
depreciation
and
amortization         1,718               2,043               2,594               2,704        
of
unconsolidated
joint ventures
Funds from
unconsolidated
joint venture
operations
applicable to        2,013               2,714               2,647               2,965
common shares
and
Partnership
units
                                                                                  
Funds from
Operations
applicable to
common shares        23,221              23,436              25,577              22,139
and
Partnership
units
                                                                                  
Add:
FFO allocated
to
noncontrolling       -                   139                 -                   -
interests in
consolidated
joint ventures
Non-cash
extinguishment
of issuance
costs upon           -                   -                   2,250               -
redemption of
series A
preferred
stock
Non-cash
income tax           1,438               -                   309                 -
expense
Non-cash stock
compensation         2,439               2,266               4,827               4,399
expense
Acquisition
and terminated       773                 124                 776                 1,082
transaction
costs
Amortization
of deferred          761                 484                 1,377               1,501
financing
costs
Amortization
of discounts         (211        )       (35         )       (420        )       (3          )
and premiums
Deferred
financing
costs written        284                 240                 545                 246
off in debt
extinguishment
Straight-line
amortization         1                   2                   2                   36
of ground
lease expense
Real estate
taxes expense
related to
reassessment         -                   -                   434                 -            
of prior
period
assessment
                                                                                  
Adjusted Funds
from               $ 28,706            $ 26,656            $ 35,677            $ 29,400       
Operations
                                                                                  
AFFO per
Diluted
Weighted
Average Common     $ 0.14              $ 0.14              $ 0.17              $ 0.16         
Shares and
Units
Outstanding
                                                                                  
Diluted
Weighted
Average Common       208,145,833         196,269,594         208,106,138         188,349,152
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             Six Months Ended
                    June 30,        June 30,       June 30,        June 30,
                    2013            2012           2013            2012
                                                                      
Net income
applicable to       $ 14,286        $ 13,093       $ 1,189         $ 2,420
common
shareholders
(Income) loss
from                  (148    )       (190   )       248             540
unconsolidated
joint ventures
Gain on hotel         (12,107 )       -              (12,107 )       -
acquisition
Gain on
disposition of        (1,043  )       (6,949 )       (1,043  )       (11,452 )
hotel
properties
Loss from
impairment of         3,723           -              3,723           -
assets
Income (Loss)
allocated to          210             796            (463    )       55
noncontrolling
interest
Non-operating         (14     )       (15    )       (46     )       (29     )
interest income
Distributions
to Preferred          3,589           3,500          7,433           7,000
Shareholders
Interest
expense from          11,138          10,442         21,558          21,925
continuing
operations
Interest
expense from          -               188            -               1,200
discontinued
operations
Extinguishment
of issuance
costs upon            -               -              2,250           -
redemption of
series A
preferred stock
Income tax            1,438           -              309             -
expense
Deferred
financing costs
written off in        284             240            545             246
debt
extinguishment
Depreciation
and
amortization          16,083          13,924         30,957          27,155
from continuing
operations
Depreciation
and
amortization          204             187            426             456
from
discontinued
operations
Acquisition and
terminated            773             124            776             1,082
transaction
costs
Non-cash stock
compensation          2,439           2,266          4,827           4,399
expense
Straight-line
amortization of       1               2              2               36
ground lease
expense
Real estate
taxes expense
related to            -               -              434             -        
reassessment of
prior period
assessment
                                                                      
Adjusted EBITDA
from
consolidated          40,856          37,608         61,018          55,033   
hotel
operations
                                                                      
Income (loss)
from
unconsolidated        148             190            (248    )       (540    )
joint venture
investments
Loss on
remeasurement
of investment         -               224            -               224
in
unconsolidated
joint ventures
Depreciation
and
amortization of       147             257            301             577
purchase price
in excess of
historical cost
Adjustment for
interest in
interest
expense,
depreciation          3,850           6,325          5,990           9,634    
and
amortization of
unconsolidated
joint ventures
                                                                      
Adjusted EBITDA
from
unconsolidated        4,145           6,996          6,043           9,895    
joint venture
operations
                                                                      
Adjusted EBITDA     $ 45,001        $ 44,604       $ 67,061        $ 64,928   

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, 215-238-1046
CFO
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