Hersha Sells Manhattan Hotel Portfolio

Adjacent to each other in Times Square, several of Hersha Hospitality Trust’s hotels here have been sold.

NEW YORK CITY— Hersha Hospitality Trust has sold the controlling interest in seven of its limited service hotels, providing 1,087 rooms, in Manhattan to Cindat Capital Management for $571.4 million, or $526,000 per key. The two companies agreed to form a joint venture in which Cindat is the preferred partner—holding a 70% ownership stake—while Hersha retains a 30% equity interest. Assets that will be contributed to the joint venture are the Holiday Inn Express Times Square, 210 rooms; Candlewood Suites Times Square, 188 rooms; Hampton Inn Times Square, 184 rooms; Hampton Inn Chelsea, 144 rooms; Hampton Inn Herald Square, 136 rooms; Holiday Inn Wall Street, 113 rooms and Holiday Inn Express Wall Street, 112 rooms. “The city’s preeminence as a financial, cultural, and technological hub, combined with the security and scarcity of its real estate, provides significant yield for a strategic, long-term partner such as Cindat,” says Neil Shah , Hersha president and COO. “On a pro forma basis, the sale reduces Hersha’s EBITDA exposure in New York City from approximately 43% in 2015 to 25% of consolidated EBITDA this year.” He continues, “The company intends to utilize a portion of the sale proceeds to make hotel investments in Washington, DC and California, continue its share repurchase program and repay debt.” In fact, that step already has started, Shah adds. “In conjunction with the sale of this Manhattan portfolio, the company acquired the 86-room Ritz-Carlton Georgetown in Washington, DC for $50 million and signed a purchase and sale agreement to acquire the 238-room Hilton Garden Inn M Street for almost $107 million. We are excited to acquire both hotels at an attractive basis, and expect they will generate strong returns. The acquisition of both hotels, which brings our urban Washington, DC hotel cluster to five hotels, adds depth to our portfolio and, combined with our acquisition of the St. Gregory in June, strengthens the company’s presence in Washington’s urban core.”