PHILADELPHIA—Hersha Hospitality Trust, owner of upscale hotels in urban gateway markets, announced that the company has entered into a definitive agreement to sell the Hotel 373 located in midtown Manhattan. The 70-room hotel is being sold to an offshore investment group for $37 million, or approximately $529,000 per key.
“The pricing on the sale of Hotel 373 is indicative of Manhattan’s highly sought after real estate market, and underscores the quality and value of Hersha’s New York City hotel portfolio. We believe the sale of Hotel 373 will narrow the gap between the private and public market value of the company’s real estate,” stated Mr. Jay H. Shah, the company’s chief executive officer. “The transaction is a strong indication of continuing domestic and international interest from public and private groups seeking to acquire cash flowing real estate in top U.S. gateway markets. We remain optimistic regarding the long-term prospects of the New York City hotel market, but we will continue to search for opportunities to divest high-yielding, stabilized assets and to redeploy the proceeds into higher growth opportunities or to pursue stock buyback opportunities at periods when the stock price does not appropriately reflect value.”
The sale price values the hotel at $1,680 per square foot, and on 2013 operating results represents an economic capitalization rate of 5.2 percent and a hotel EBITDA multiple of 17.3x. The transaction is expected to close during the second quarter of 2014, and is subject to customary closing conditions.