Hersha Hospitality Announces Sale of Non-Core Properties
“As part of our strategy to opportunistically recycle capital, we have implemented a plan to explore the sale of certain non-core brands and assets in locations that we believe have less opportunity for growth in the future,” stated Mr. Jay H. Shah, Hersha Hospitality’s Chief Executive Officer. “We are pleased that even in this challenging environment we were able to negotiate deals at favorable multiples, which along with additional sales that we are pursuing, indicates that there is a market for limited service hotels. We intend to continue our asset disposition program for non-core properties and to pay down debt to create greater financial flexibility as we navigate through this turbulent cycle.”
Hersha is selling the Frederick properties, with a total of 145 rooms, for $10.3 million. The 180-room Four Points Reserve is a joint-venture in which the Company is selling its 55% interest for $2.5 million. Net proceeds from the sales are expected to total $7.1 million, and the Company will record a net gain of approximately $1.2 million in the third quarter of 2009.
The sales of the Frederick facilities closed on July 14, 2009 and the Revere asset sale is expected to close in the third quarter of 2009. The pending disposition is subject to conditions beyond the Company’s control, and there can be no assurance that this disposition will occur at the time or on the terms currently expected.
About Hersha Hospitality Trust | Hersha Hospitality Trust is a self-advised real estate investment trust that owns interests in 75 hotels totaling 9,562 rooms, primarily along the northeast corridor from Boston to Washington D.C. The company also owns hotels in northern California and Scottsdale, Arizona. Hersha focuses on high-quality, upscale hotels in major metropolitan markets with a high barrier to entry.
Forward-Looking Statements | This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those reflected in the forward-looking statement. For a description of these factors, please review the information under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the U.S. Securities Exchange Commission and the prospectus supplement relating to the offering.
Hotel EBITDA and GAAP Reconciliation | Hotel earnings before interest, taxes, depreciation, and amortization (“Hotel EBITDA”) is a commonly used measure of performance in the hotel industry for a specific hotel or group of hotels. The Company believes Hotel EBITDA provides a more complete understanding of the operating results of the individual hotel or group of hotels. It calculates Hotel EBITDA by utilizing the total revenues generated from hotel operations less all operating expenses, property taxes, insurance and management fees, which calculation excludes Company expenses not specific to a hotel. Because Hotel EBITDA is specific to individual hotels or groups of hotels and not to the Company as a whole, it is not reconcilable to any comparable GAAP measure for the Company.