Hersha Acquires Sheraton JFK Airport
JUNE 19, 2008. Hersha Hospitality Trust (NYSE: HT), owner of nationally franchised premium select service and full service hotels, announced today that it has purchased the Sheraton JFK Airport Hotel, a brand new 150-room hotel located near the JFK Airport in Jamaica, New York for $33.98 million. The property, which also has approximately 2,300 square feet of meeting space, will be managed by Hersha Hospitality Management, L.P. The Sheraton JFK Airport Hotel is located at 132-26 South Conduit Avenue, Jamaica, New York.
Jay H. Shah, Chief Executive Officer commented, "We are excited to add another newly built hotel to our already young portfolio. New properties provide us solid growth opportunities, as they mature, and have been one of the catalysts for our industry leading revenue per available room (RevPAR) and growth in funds from operations. This property, located approximately one-half mile from JFK International Airport, is the first and only upper upscale asset at one of the world's most recognized and busiest airports. We now own 15 properties in the New York-New Jersey area, including the NU Hotel being developed in Brooklyn.
The transaction is a direct result of the success of our development loan program, which affords us the right to earn strong cash returns on our investment in high barrier to entry markets while avoiding many of the risks associated with construction in these central business districts. An added benefit of the program is our right to purchase these difficult to source properties, on an off-market basis. Most of the properties currently financed through our development loan program are in the vibrant New York City market, which continues to have solid RevPAR trends from strong domestic and increased international demand."
In connection with the purchase, the Company assumed a floating rate loan for $23.8 million at LIBOR plus 2.0% and issued 1,177,306 Hersha Hospitality Limited Partnership Units to a third party developer, and to Hersha Conduit Associates, LLC, a related party entity comprised of certain members of the Company's management team and trustees.
Forward-looking Statements
Certain matters within this press release are discussed using forward-looking language as specified in 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 projected 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, 2007, filed with the Securities Exchange Commission (SEC).
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