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Hersha Buys 2 DC Hotels With Proceeds From Manhattan Sale

WASHINGTON, DC—It is buying the Ritz-Carlton Georgetown for $50 million and the 238-room Hilton Garden Inn M Street for almost $107 million.

By Erika Morphy | erikamorphy | | Updated on February 05, 2016
The Ritz-Carlton Georgetown is trading for $50 million. The Ritz-Carlton Georgetown is trading for $50 million.
WASHINGTON, DC—The big news (for this week) in the US hotel industry is Hersha Hospitality Trust’s sale of the controlling interest in seven of its limited service hotels for $571.4 million. The big news for the DC hotel industry is that Hersha is using some of the proceeds from that transaction to acquire two local hotels: the 86-room Ritz-Carlton Georgetown for $50 million and the 238-room Hilton Garden Inn M Street for almost $107 million. The REIT appears to have developed an appetite for hospitality assets here. It acquired the St. Gregory last June, which Hersha COO and president Neil Shah pointed out as he discussed the DC element of the transaction. “We are excited to acquire both hotels at an attractive basis, and expect they will generate strong returns,” he said. “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.” The larger transaction is an interesting one as the buyer is the Chinese investment firm Cindat Capital Management. The two formed a joint venture to move the 1,087-key portfolio. Cindat is the preferred partner—holding a 70% ownership stake—while Hersha retains a 30% equity interest. 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, according to Shah.

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