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Hersha, Pinnacle Seal $35M Off-Market Deal

ALEXANDRIA, VA-Thanks to a pre-existing relationship with the seller, Hersha gets a 203-key hotel at below market and replacement cost.

By Erika Morphy | Updated on October 04, 2006

ALEXANDRIA, VA-Philadelphia-based Hersha Hospitality Trust has acquired the 203-room Courtyard by Marriott for $35 million. The trust’s sixth acquisition in the Washington, DC area was bought off-market from Pinnacle Hospitality Group of Rockville, MD.

Hersha used a combination of cash and $25 million in fixed-rate, first-mortgage financing with an interest rate of 6.25%. Hersha CEO Jay H. Shah says the deal is structured at an 8.3% forward cap rate. Marriott will continue to manage the property at 4641 Kenmore Ave.

“We look forward to growing our management relationship with Marriott over time,” Shah also says in the press release. “With the addition of the Courtyard Alexandria, we have increased our leverage to the upscale segment of the hotel industry to more than half of the total rooms in our total portfolio.”

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