Hersha Hospitality Trust to sell seven assets for $505 million

HARRISBURG, PA — Hospitality REIT Hersha Hospitality Trust has reached an agreement to sell seven of its non-core, Urban Select Service hotel properties outside of New York City for $505 million.

The transaction, which will equate to $360,000 per key, aligns with the company’s long-term strategy to focus on resort, luxury, lifestyle and destination assets, as well as its New York portfolio.

Hersha CEO Jay H. Shah said, “We are delighted to have reached an agreement that supports our long-term strategic goals and delivers immediate shareholder value. With the sale of these non-core properties, we are able to continue our transformation by deepening our focus on our luxury and lifestyle portfolios and in New York, both demonstrating our resilience as we emerge from the pandemic.

Shah adds, “Our resort markets and lifestyle properties continue to outperform – as evidenced by our first quarter financial results announced yesterday – and our purpose-built cluster in New York, coupled with our unique operating model, we positioned for strong performance throughout the recovery. .”

The seven properties include Courtyard Brookline; Hampton Inn – Philadelphia; Hilton Garden Inn M Street; Hampton Inn – Washington DC; Sunnyvale Court; Los Angeles West Side Court; and TownePlace Suite Sunnyvale.

Hersha plans to use the sale proceeds to provide immediate cash for a reduction in net debt from $460 million to $480 million.

In addition to $390-410 million in corporate debt, Hersha expects to reduce portfolio mortgage debt by $75 million, resulting in a pro forma consolidated leverage ratio of 4.9x-5, 1x. The company also intends to overhaul its existing credit facility to eliminate all corporate-level debt maturities through 2024.

Upon completion of the transaction, subject to customary closing conditions, Hersha will own a total of 26 hotels in six US destination markets. The transaction is expected to close in the third quarter of 2022.

On a pro forma basis, based on actual 2019 performance, the company’s remaining portfolio total RevPAR would have decreased from $206 to $219, its total ADR would have decreased from $247 to $262, and EBITDA per key would have gone from $32,000 to $33,000.

Comments are closed.