(To read more on the debt and equity markets, click here.)
PHILADELPHIA-Hersha Hospitality Trust's acquisition of 25 hotels since second-quarter 2005 contributed to a 42% increase in adjusted FFO and a 100% spike in consolidated hotel revenues in this year's second quarter. FFO for Q2 2006 was 34 cents a diluted share, up from 24 cents at the same time a year ago.
The locally based hospitality REIT acquired five properties with an aggregate of 661 rooms during the three months ended June 30. Consolidated revenues reached $38.2 million, up from $19.1 million for the same three months of 2005.
RevPAR for the 44-property portfolio rose 11.8% year-over-year to $89.2. It was driven by a 10.1% rise in average daily rates to $112.97 and a 1.6% improvement in occupancy, which stood at 78.9% at the end of the quarter. Gross operating margins also inched ahead to 47% versus 46.7% for the same quarter of 2005.
More acquisitions lay in wait under the company's development loan program. During a conference call, CEO Jay Shah said Hersha made $41 million in loans at an interest rate of 10% to developers of properties in "four excellent New York City locations." They are in Times Square, Union Square, Chelsea and JFK International Airport. Under the program, Hersha has first right of refusal on all four assets. Shah said the developments typically reach completion within one to three years.
During the quarter, Hersha also disposed of Holiday Inn Express in Hartford for $3.6 million. Its Atlanta portfolio, which Shah called "non-core," is under contract. He expects to close on that sale in the fourth quarter for a total of about $6 million, from which the company will gain approximately $1 million.
In answer to an analyst's question regarding "softness" in the leisure travel market, Shah said the Hersha portfolio is weighted to corporate travel. He estimated that between 15% and 20% of revenue comes from leisure travelers, "a small enough number that we've had no material impact from softness in leisure demand. We've seen some softness, "but it has not been material to us."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
