Based upon the sales price and debt payoffs, Hersha expects $105.3 million in net proceeds from the sale. The sale price for the portfolio reflects a trailing economic capitalization rate of 8% based on the hotel's net operating income for the twelve-month period ended July 31, 2016, and a hotel EBITDA multiple of 11.4x.

WASHINGTON, DC–The Philadelphia-based REIT Hersha Hospitality Trust announced it has entered into a definitive agreement to sell a 5-hotel suburban portfolio totaling 757 rooms for $185.0 million, or $244,000 per key.

Two of those hotels are located in the Washington DC area: the 203-key Courtyard Alexandria in Northern Virginia and the Residence Inn in Greenbelt, MD, which has 103 rooms. The other hotels are located in Arizona and California. They are Hyatt House Scottsdale, the Hyatt House Pleasant Hill and the Hyatt House Pleasanton.

The REIT is selling the hotels to recycle its capital, CEO Jay H. Shah says in a prepared statement.

“These five hotels performed very well during our 10-year hold period, delivering a levered IRR in the teens at 50% leverage and a 2.0x equity return multiple, in addition to being foundational to our major metro, premium RevPAR, select service strategy at the time,” he said.

Based upon the sales price and debt payoffs, Hersha expects $105.3 million in net proceeds from the sale. The sale price for the portfolio reflects a trailing economic capitalization rate of 8% based on the hotel's net operating income for the twelve-month period ended July 31, 2016, and a hotel EBITDA multiple of 11.4x.