Hersha Hospitality Trust (NYSE:HT) today announced the Company has entered into a definitive agreement to purchase two Autograph Collection hotels in Miami’s South Beach. The purchase price for the South Beach Autograph Portfolio, which totals 145 rooms, is $50.95 million.
“The proposed acquisition of the South Beach Autograph Portfolio is a continuation of Hersha’s strategy to increase its presence in the Miami Beach submarket, following the non-core portfolio sale announced in September, and characterizes the Company’s commitment to redeploy capital and invest in assets that deliver higher growth. Both properties are of superior quality driven by significant transient demand in one of the country’s highest barriers to entry hotel markets. The South Beach Autograph Portfolio represents a unique opportunity to acquire two fully-renovated properties in the highly desirable South Beach Market, and solidifies Hersha’s presence in Miami. Combined with the new tower opening at the Cadillac Courtyard Oceanfront, Hersha will control a significant portion of Marriott-branded assets on Miami Beach,” stated Mr. Jay H. Shah, Hersha’s Chief Executive Officer.
The South Beach Autograph Portfolio includes the 75-room Blue Moon Hotel and the 70-room Winter Haven Hotel. The hotels underwent a comprehensive $9 million renovation, completed in mid-2013, and are located in the heart of the highly desirable South Beach Art Deco District. The geographic proximity of the two hotels will facilitate efficient management of the two properties, benefitting from revenue management, accounting, IT and sales synergies. Furthermore, as part of Marriott’s Autograph Collection, the hotels are expected to retain their unique independent desirability, while leveraging Marriott’s powerful distribution capabilities. Upon closing of the transaction, the hotels will be managed by HHM.
South Florida’s diverse local economy and varied attractions combine to make Miami one of the strongest lodging markets in the United States. The strength of the market is driven in large part by the success of the Miami Beach submarket. According to Smith Travel and Research, RevPAR in the Miami Beach submarket increased 11.9% to $185.43 year-to-date 2013 through the end of October compared to 2012, while the overall Miami-Hialeah market reported a 9.7% RevPAR increase to $135.39.
The Company anticipates that the purchase price for the South Beach Autograph Portfolio reflects a full-year 2014 economic capitalization rate of approximately 6.8% and an 8.5% - 9.0% capitalization rate on stabilized earnings.
The acquisition of the South Beach Autograph Portfolio will be funded with cash on hand, and with a portion of the $138 million in net proceeds generated from the non-core portfolio sale. The South Beach Autograph Portfolio transaction is expected to close by the end of fourth quarter 2013, and is subject to a variety of closing conditions. 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.
The Company has posted a presentation of supplemental information regarding the purchase of the South Beach Autograph Portfolio on its website at in the Investor Relations section under “Presentations”.
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