Hersha Hospitality Trust (NYSE: HT) announced it has completed its capital recycling campaign with the disposition of three extended stay hotels for $130.5 million and the acquisition of the Westin Philadelphia for $135 million.
Disposition of Three Suburban West Coast Hotels
The Company announced the completion of the sale of three Hyatt House hotels which were sold unencumbered of debt and generated taxable gains of approximately $67 million. The portfolio sale included the 142-room Hyatt House in Pleasant Hill, CA, the 128-room Hyatt House in Pleasanton, CA, and the 164-room Hyatt House in Scottsdale, AZ for $130.5 million or approximately $301,000 per key.
“The successful closing of this transaction marks the 24th month of our capital recycling campaign during which we sold approximately $850 million of mature, stabilized hotels and successfully deferred $270 million of taxable gains with $816 million of accretive acquisitions. In addition to refining our portfolio’s market mix to urban gateway and coastal destinations, our improved portfolio quality focuses our capabilities on hotels with higher RevPAR and EBITDA growth potential in our core markets. Proceeds from the sale provide financial flexibility as we continue to execute our business plan and ongoing ROI projects,” stated Mr. Jay H. Shah, Hersha’s Chief Executive Officer.
Mr. Shah continued, “We have owned these hotels for 10 years and they have proven to be very productive investments. The combined EBITDA generated at the three hotels at the time of sale was 60% above prior peak and 233% above the trough of 2010. We look to drive similar success from our most recent acquisitions in Philadelphia, Boston, Santa Monica, Seattle, and Miami.”
Acquisition of The Westin, Philadelphia
The Company also announced the acquisition of the AAA Four-Diamond 294-room Westin Hotel in Philadelphia, PA for $135 million. The investment represents a purchase price of $459,000 per key and a trailing LTM cap rate of 7.8%.
Mr. Shah commented, “We are pleased to acquire the Westin at an attractive basis expanding our Philadelphia cluster to include the leading corporate hotel in the market. The Westin is particularly well located in the heart of Philadelphia’s 45 million square foot office district in close proximity to Center City’s unique demand generators including the new Comcast Innovation and Technology Center, Rittenhouse Square, City Hall, the Pennsylvania Convention Center, and University City. The Westin is also part of the iconic Liberty Place mixed use complex that includes 2.4 million square feet of office, retail, food hall and residential space in addition to an underground parking garage. The hotel was originally opened as the Ritz-Carlton in 1990 and has maintained the brand’s hallmarks including marble finishes, extensive handcrafted millwork, and oversized guestrooms and bathrooms. In addition, the Westin has 16,600 square feet of meeting space including a 7,500 square foot ballroom. Our Philadelphia cluster also includes The Rittenhouse Hotel and the Hampton Inn Convention Center and will benefit from increased economies of scale from this acquisition. The Westin’s superior asset quality and strong cash flow yield makes the investment immediately accretive to our portfolio FFO, NAV and RevPAR.”
Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale hotels in urban gateway markets. The Company's 51 hotels totaling 7,804 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT”.
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