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PHILADELPHIA-Net income, operating income, revenue and adjusted funds from operations all posted double-digit increases for Hersha Hospitality Trust during third quarter. Hotel performance within the portfolio also made gains.
Net income for the quarter was $7.3 million, up 59.3% from $4.6 million for the same quarter a year ago. Operating income soared 71.3% to $18.6 million, versus $10.9 million for the same quarter of 2006. Total hotel operating revenues leapt 68.2% to $65.6 million, compared with $39 million at the same time the previous year, and adjusted funds from operation rose $12.8% for the quarter.
The increased stabilization of young properties in the portfolio and the company's growing presence in New York City contributed to the increases, according to Jay Shah, CEO. During a conference call, he said. "Our hotels in New York City had RevPAR growth in the third quarter of 17.2%, compared to 15.3% industry-wide for New York City." RevPAR also increased at properties in metropolitan Boston and Philadelphia, up 12.3% and 8%, respectively.
On a same-store basis, RevPAR for the 37 hotels held for a year or more rose 9.5% to $108.40. The increase was driven by a 7.3% rise in average daily room rate to $132.98 and improved occupancy, which reached 81.5%.
During fourth quarter, Hersha plans to close on the sales of the Linden/Newark Airport and Fairfield Inn by Marriott in Mt. Laurel, NJ. The anticipated $12.5 million in proceeds will be used to reduce debt. As of this Sept. 30, the company had approximately $709.3 million of total debt.
"We intend to make debt reduction a bigger priority that in it was when we were still looking at purchases of large portfolios," Shah said. "We will continue to review our portfolio for non-core assets to sell and utilize potential operating cash flow to help shrink our total debt."
Asked about potential acquisitions, Shah said that the pipeline of availabilities has not slowed, but prices have not dropped. "We continue to chase" selective attractive properties, he said, "putting down the price we're willing to pay. As has been the case all year long, we're not getting them."
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