Hersha Pushes West With $169M Portfolio Buy

PHILADELPHIA-Hersha Hospitality Trust has signed an agreement to buy seven extended-stay suite hotels from Wichita, KS-based LodgeWorks LP for approximately $169 million, or $168,159 per key. Four of the assets are in the locally based hospitality REIT’s core Northeast and mid-Atlantic regions, while the other three take it to new markets in Arizona and California.

The portfolio has an aggregate of 1,005 keys. Neil Shah, Hersha’s president and COO, tells GlobeSt.com the average age of the properties is five to six years, and all are currently being converted to the Hyatt Summerfield Suites brand. “They operated without a major brand and did well,” he says, “and we think the Hyatt brand will add substantial upside to rate and occupancy.

“This was just too good to pass up,” Shah says. The buy will be accredited to 2007 earnings and was acquired at favorable cap rates and at prices below replacement cost in these key markets, according to Shah. Hersha plans to invest $2.5 million in capital improvements to the portfolio while LodgeWorks will bear any additional costs of brand compliance.