Hersha Hospitality Trust (
a self-advised real estate investment trust, recently announced
that it has purchased the remaining 50% ownership stake in the
'Holiday Inn Express 29
Street' hotel in New York for $10.0 million. The purchase
price totaled $87.5 million, including the company's initial
investment at the start of operations in February 2007.
The acquisition price signifies an initial capitalization rate
of around 8.4% on the company's estimated net operating income for
the twelve months ending December 2012 and an expected stabilized
capitalization rate of 10.5%.
Midtown South-based, Holiday Inn Express 29
Street, consists of 228 rooms, a business center and other
modern amenities. Located centrally between 8
Avenue and 7
Avenue, the property is well linked with the largest
intercity train stations and major commuter rail hubs of Manhattan-
Madison Square Garden and Penn Station.
Since 2007, the property had been considered as an
unconsolidated joint venture investment but from now it will be
treated as consolidated asset. The acquisition transaction follows
the company's previous acquisition of 50% ownership share for $7.5
million way back in February 2007. The property bears an
outstanding first mortgage loan balance of $54.6 million at
interest rate of 6.5% having a maturation date of November 2016.
Alongside, it also bears a mezzanine loan of $15.0 million, which
matures by the end of the second quarter of 2012.
The portfolio repositioning program is aimed towards core urban
gateway markets with higher growth opportunities that in turn would
result in higher RevPAR (revenue per available room), improved
Hotel EBITDA (earnings before interest, tax, depreciation, and
amortization) margins, lower debt and a higher net asset value for
the entire portfolio.
Management remains upbeat about the acquisition as it fulfills
the company's strategic goals. They expect the hotel to be a
quality addition to its existing high-quality properties in New
York and strengthen the RevPAR to reach prior peak levels. Hersha
Hospitality currently owns around 15 properties in New York.
New Cumberland, Pennsylvania-based Hersha Hospitality focuses on
upscale, mid-priced and extended stay hotels in major metropolitan
markets in the U.S. The company currently owns 64 hotels totaling
9,221 rooms, primarily along the Northeast Corridor from Boston,
Massachusetts to Washington DC. The company also owns hotels in Los
Angeles, Northern California and Arizona.
The company, which competes with the likes of
Ashford Hospitality Trust Inc. (
Host Hotels & Resorts Inc. (
, presently has a long-term 'Neutral' recommendation and a Zacks #3
Rank that translates into a short-term 'Hold' rating.
ASHFORD HOSPTLY (AHT): Free Stock Analysis
HOST HOTEL&RSRT (HST): Free Stock Analysis
HERSHA HOSPTLY (HT): Free Stock Analysis Report
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