- Company Will Now Own Eight Hotels In The D.C. Region
- Purchases a Brand New Full Service Hotel Near Wilmington, Delaware
PHILADELPHIA--(BUSINESS WIRE)--
Hersha Hospitality Trust(NYSE: HT), owner of select service and
upscale hotels in major metropolitan markets, announced that it has
signed a definitive agreement to purchase the 152 room Capitol Hill
Suites, Washington, D.C. for approximately $47.5 million, or $312
thousand per key excluding closing costs.
The Capitol Hill Suites is centrally located in the Capitol Hill
district, a block away from the United States Capitol Complex, the House
of Representative office complex, the United States Supreme Court and
the Library of Congress. The hotel is a short walk to the National Mall
and the Smithsonian Museums. The Capitol Hill historic district has
undergone dynamic revival becoming a highly sought after Washington,
D.C. neighborhood with numerous restaurants, retail locations and
cultural and community organizations based there.
Jay H. Shah, Chief Executive Officer, stated, “We are pleased to
continue our growth in the highly desirable Washington, D.C. market. As
a large beneficiary of increased investments in federal and private
sector capital outlays, the D.C. region has strong economic and
employment fundamentals. The strong real estate fundamentals are equally
attractive, with high barriers to entry and negligible planned
construction forecasted for several years, combined with growing demand.
We are particularly encouraged by the Capitol Hill submarket and our
specific location as it benefits from a wide variety of corporate and
leisure demand generators related to the nation’s legislative and
judicial institutions that are within blocks of the hotel. As we expand
our presence in the region, we expect to achieve operational synergies
while also benefiting from the ongoing recovery. We continue to
effectively execute on our long term strategy of increasing our presence
in the highest growth markets in the nation, which combined with our
high quality select service portfolio, will allow Hersha to continue to
outperform through the recovery.”
The Capitol Hill Suites is an all-suite boutique hotel, with rooms among
the largest in the city. It attracts both extended stay guests and
transient guests seeking more space in a desirable location. The hotel
completed an extensive $8.0 million renovation in 2008, consequently, it
is anticipated that minimal capital expenditures over the near term will
be required.
The purchase price represents a forward capitalization rate of
approximately 7.3% on the hotel’s projected 2011 net operating income,
stabilizing at approximately 10%. The acquisition is anticipated to be
funded by assuming $32.5 million of existing debt with a 5.81% interest
rate and cash on hand.
The Company anticipates the closing of this acquisition will occur by
the end of the first quarter of 2011. 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.
Additionally, the Company has purchased and closed on a 191 room hotel
at Delaware Park in New Castle, Delaware for $15 million, or $78
thousand per key excluding closing costs. The Company took advantage of
ongoing market dislocation in the development community to pursue the
opportunistic acquisition of this hotel which has never been opened. It
is expected to open by the third quarter of 2011 and will be franchised
with a leading upper upscale brand. The hotel is in as-new condition,
and including the costs to upfit and furnish, the all-in cost to Hersha
is targeted to be less than $20 million. The hotel is in a highly
visible location on Route 95, five miles south of downtown Wilmington
and near the Delaware Park Casino and Racetrack, the New Castle
Corporate Airport, a 400 acre commercial park, the Christiana Mall which
is the largest regional mall in Delaware, and the University of
Delaware. The hotel includes 8,000 square feet of market-leading social
and business meeting space overlooking the Delaware Wetlands.
About Hersha Hospitality
Hersha Hospitality Trust is a self-advised real estate investment trust,
which owns interests in 77 hotels, totaling 10,262 rooms, primarily
along the Northeast Corridor from Boston to Washington D.C. Hersha also
owns hotels in Northern California and Scottsdale, Arizona. Hersha
focuses on upscale, mid-scale and extended stay hotels in major
metropolitan markets.
Forward Looking Statement
Certain statements in this press release, including the statement
related to the newly acquired hotel’s potential for growth in cash
flows, are forward-looking statements within the meaning of the federal
securities laws, 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. For a description of these factors, please review the
information under the heading “Risk Factors” included in our Annual
Report on Form 10-K for the year ended December 31, 2009 filed with the
U.S. Securities and Exchange Commission.
Source: Hersha Hospitality Trust
Contact:
Hersha Hospitality Trust
Ashish Parikh, 215-238-1046
Chief
Financial Officer