Hersha Announces Hotel Opening and Funding of Development Loans
Adds New Homewood Suites in Connecticut to Portfolio; Funds Development Loans for Two New York City
NEW CUMBERLAND, PA, June 20, 2006. Hersha Hospitality Trust (AMEX: HT), a real estate investment trust (REIT) and owner of 59 nationally franchised, upper-upscale, upscale and midscale limited service and extended-stay hotels, today announced that it has opened the Homewood Suites by Hilton in Glastonbury, Connecticut. As previously announced, the 136-room extended-stay property was developed through a joint venture partnership between Hersha and PRA Development and Management Corporation, a Philadelphia, Pennsylvania-based commercial real estate developer. The Company's 40% interest was purchased for approximately $2.5 million and carries a preferred return of 10% per annum.
Jay H. Shah, Chief Executive Officer commented, "We are excited to begin operation of the Homewood Suites Glastonbury, the tenth extended stay hotel in our portfolio. The upscale Homewood Suites brand provides us the opportunity to improve upon our strong operating margins and provides us further opportunities to leverage the fast growing extended stay market, which we are targeting in our acquisitions program. This transaction is also another good example of our highly productive joint-venture program, through which we are able to acquire assets on an off-market basis at or below today's replacement cost. As with our other joint-venture assets, the cash preferred return helps to mitigate the ramp up for the property creating additional value for our shareholders."
Located at 65 Glastonbury Boulevard, the six-story Homewood Suites by Hilton in Glastonbury features residential style studios, one and two bedroom suites with fully-equipped kitchens, complimentary high-speed internet access and "Suite Start breakfast". The hotel is located adjacent to the 150 room Hilton Garden Inn in Glastonbury that Hersha and PRA Development also own jointly.
Separately, Hersha also announced that it has funded two development loans as part of its development loan program, which affords the company the right to purchase the hotel upon completion. The loans are being used to fund hotel developments in the heart of Manhattan - the Union Square Hotel at 4th Avenue and 13th Street and the Holiday Inn Express on 29th Street at 8th Avenue. These loans afford the Company a cash interest payment of 10% per annum and a first right of offer upon completion. The loan commitment by the Company for the Union Square Hotel and the Holiday Inn Express is $10 million and $15 million, respectively, of which $6 million and $5 million, respectively, has been funded to date.
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