Proceeds of Portfolio Sale Will Be Used to Acquire Additional Assets, General Corporate Purposes
Hersha Hospitality Trust (NYSE:HT
) announced it will sell seven limited-service hotels totaling 1,087 rooms to a joint venture established with Chinese investment company Cindat Capital Management Ltd. for $571.4 million, or $526,000 per key.
In the transaction expected to close next month, Cindat would hold a 70% equity interest while Hersha would retain a 30% interest in the hotels operating under the Holiday Inn, Hampton Inn and Candlewood brands.
Hersha expects $300 million in net proceeds with taxable gains on the sale between $170 million and $180 million from the transaction, to be structured as a 1031 tax exchange and used to acquire other assets such as the Ritz-Carlton Georgetown, Sanctuary Beach Resort on Monterey Bay and Hilton Garden Inn M Street, Washington, DC. Hersha intends to use the remaining proceeds to repurchase common shares, pay down debt and for general corporate purposes.
Assets contributed to the joint venture include the following:
-Holiday Inn Express Times Square, 210 rooms
-Candlewood Suites Times Square, 188 rooms
-Hampton Inn Times Square, 184 rooms
-Hampton Inn Chelsea, 144rooms
-Hampton Inn Herald Square, 136 rooms
-Holiday Inn Wall Street, 113 rooms
-Holiday Inn Express Wall Street, 112 rooms