Hersha Hospitality Trust HT, owner of upscale and
select service hotels in major metropolitan markets, announced that the
Company has entered into a purchase and sale agreement to acquire the 205 room
Hilton Garden Inn in New York City located at 52^nd Street near Third Avenue
for total consideration of $74.0 million, or approximately $361,000 per key.
The transaction is expected to close shortly after the developer completes the
hotel's construction, anticipated in the fourth quarter of 2013.
“We have been able to source another extremely attractive off-market asset to
add to our Manhattan portfolio. Not only will it be a high quality,
well-located hotel, but we will be acquiring it at a basis that is
approximately 25% below the average price per room for recent comparable
transactions,” commented Jay H. Shah, Chief Executive Officer. “Appealing to
both corporate and leisure travelers, the HGI Midtown East is ideally situated
within a 19.8 million square foot office market and is proximate to a number
of notable landmarks including the United Nations, Grand Central Station and
Rockefeller Center. This asset will be only the second hotel to open in this
submarket in the last 15 years speaking volumes of its high barriers to
entry.”
The Company has provided $17.0 million to the seller as a non-refundable
deposit earning a current cash coupon of 10% per annum. At the completion of
construction, the Company will assume or extinguish $42 million of first
mortgage debt and make an additional cash payment of $15.0 million. While this
purchase and sale agreement secures the Company's right to acquire the
completed hotel, the Company is not assuming any construction risk, including
the risk of schedule and cost overruns. Upon acquisition, the hotel will be
managed by HHM.
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