PHILADELPHIA—Hersha Hospitality Trust, owner of upscale and select service hotels in major metropolitan markets, announced that the company has closed on the purchase of the Courtyard San Diego Downtown for $71.1 million and has signed a definitive agreement to purchase the Residence Inn Coconut Grove in Miami for $21.8 million.
“Both of these acquisitions further the company’s strategy to invest in high quality urban transient focused hotels in our selected gateway markets. The Southern California and Miami markets exhibit strong growth prospects and we are extremely pleased to have sourced acquisitions that fit the Company’s highly selective investment criteria,” stated Jay H. Shah, chief executive officer. “Given our strong position in New York and Boston, increasing our exposure to Miami and Southern California continues our efforts to leverage high demand, high barrier to entry international gateways to drive strong revenue and earnings growth in our portfolio building on our already strong asset value.”
The Courtyard San Diego Downtown recently underwent a $6.4 million renovation of all guestrooms and pubic areas. The purchase price reflects a first full year economic capitalization rate of approximately 7.0 percent and an expected stabilized capitalization rate of approximately 9 percent.
The Residence Inn Coconut Grove will undergo a significant upgrade starting in May 2014. This asset is being purchased from a distressed seller and is expected to benefit from more aggressive asset management and planned capital investment. The purchase price reflects a trailing capitalization rate of 7.2 percent. Post renovation the asset is expected to stabilize at a capitalization rate in excess of 11 percent.
The company anticipates closing on the Residence Inn Coconut Grove by the end of the second quarter of 2013. The proposed acquisition is subject to a variety of closing conditions.
HHM will assume management of both the Courtyard San Diego Downtown and the Residence Inn Coconut Grove.