Hersha Hospitality Increases Hotel Ownership in Manhattan by Acquiring Holiday Inn at Wall Street
Hersha Hospitality Trust (NYSE: HT) announced that it has purchased the Holiday Inn at Wall Street in New York City for approximately $34.8 million, or $308,000 per key, including closing costs and fees.
The prior owner converted the 113-room hotel, which also includes a lobby-level restaurant that is leased to a third party, to a Holiday Inn in April 2010.
“This acquisition is another step in growing our New York City portfolio with an immediately accretive asset that has a growth rate higher than our existing portfolio. The hotel, which is located in the heart of New York’s financial district across the street from the Federal Reserve and three blocks from the New York Stock Exchange, was opened only a year ago and was previously operated as an independent hotel,” commented Jay H. Shah, Chief Executive Officer. “Both the newly developed, ramp up nature of the asset and its recent affiliation with one of the leading full service brands in the world will lead to very strong RevPar and EBITDA growth at this asset in the coming years. This acquisition demonstrates the benefits we are still accruing from our development loan program and its off-market acquisition opportunities, and at the same time reduces our overall development loan exposure as we focus on our core markets and our operations.”
The hotel was acquired from a third party developer through an equity swap on the outstanding development loan balance of $7.84 million, the issuance of 200,000 limited partnership units in Hersha Hospitality Limited Partnership and approximately $26.0 million of cash. This fee simple hotel is being purchased unencumbered by debt and is managed by Hersha Hospitality Management, L.P.
The total purchase price represents an initial economic capitalization rate of 8% and an expected stabilized capitalization rate of 11%.
