Hersha Hospitality Trust (HT) recently acquired the remaining 50% ownership stake in the 130-room Courtyard by Marriott hotel located in Ewing, a sub-market of Princeton, New Jersey. With the transaction, this real estate investment trust (REIT) becomes the sole owner of this property.
Since 2004, the property has been considered an unconsolidated joint venture investment, but will become a consolidated asset as of the third quarter of 2012. With the completion of this deal, Hersha Hospitality expects that less than 8% of its 2013 Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) will be generated from its portfolio of unconsolidated joint ventures.
In concurrence with the deal, Hersha Hospitality repaid the first mortgage loan secured by the hotel and entered into a new $9.15 million revolving line of credit.
The strategic move is expected to provide long-term earnings growth to its shareholders through opportunistic investment in premium high-quality properties. Hersha Hospitality aims to further capitalize on opportunities as the sub-market recovery continues and the lodging cycle gains strength. The location of the hotel in a densely populated submarket is also expected to drive accelerated demand from corporate clients.
Hersha Hospitality primarily owns upscale hotels in urban gateway markets. It currently owns 64 hotels in major urban markets including New York, Washington, Boston, Philadelphia, Los Angeles, and Miami, totaling 9,221 rooms.
Hersha Hospitality currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Ashford Hospitality Trust (AHT), also holds a Zacks #3 Rank.
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