Hersha Hospitality to Acquire the Bulfinch Hotel
PHILADELPHIA—Hersha Hospitality Trust announced today that the Company has entered into a definitive purchase agreement to acquire the 80-room Bulfinch Hotel in downtown Boston’s West End neighborhood for $18.2 million, or $228,000 per key. READER COMMENTS
“We are pleased to capitalize on the opportunity to enhance our foothold in one of the highest barrier to entry lodging markets in the country at a price well below replacement cost,” stated Jay H. Shah, Chief Executive Officer. “The acquisition of the Bulfinch Hotel is our first in the Boston Central Business District. It is an attractive asset in a fantastic location, which can be further enhanced by the implementation of sales and revenue management initiatives. In addition to growing the revenue base, we expect that capital initiatives and overseeing an aggressive asset management program will allow us to improve the asset’s operating margins as we take advantage of opportunities to reposition this hotel.”
Hersha plans to invest approximately $2.5 million in the hotel to upgrade guestrooms, improve the food and beverage platform, and expand the fitness and business amenities.
The purchase price represents a forward capitalization rate of approximately 8.6 percent on the hotel’s projected 2013 net operating income, stabilizing at approximately 10.5 percent. The acquisition and capital improvements are anticipated to be funded with cash on hand and the company’s revolving line of credit.
The anticipated closing of this acquisition will occur by the end of the second quarter of 2012.