3 Hersha hotels Three Times Square properties known as the Manhattan trio were included in the Cindat seven-pack.

NEW YORK CITY—Hersha Hospitality Trust has closed on the joint venture for seven of the company’s limited service hotels in Manhattan with Cindat Capital Management Ltd. a China-based investment management platform—for $571.4 million, or $526,000 per key.

Cindat, backed by investors including China Cinda Asset Management Co. and Taikang Life Insurance and its affiliate, is the senior preferred joint venture partner, holding a 70% ownership stake, while Hersha retains a 30% equity interest, as well as a $37 million preferred equity interest in the venture at a 9% fixed coupon.

Natixis Real Estate Capital led a syndicate of international and domestic financial institutions and provided $285 million of senior acquisition financing to the joint venture, which was arranged by Cushman & Wakefield. An affiliate of Oaktree Real Estate Finance provided $50 million of mezzanine financing to the venture. Hunton & Williams served as legal counsel to Hersha on the transaction  while Sidley Austin served as legal counsel to Cindat. Both law firms collectively advised the newly formed joint venture. Solid Rock Advisors advised Cindat on the transaction.

The assets comprising the joint venture—providing a total of 1,087 rooms—are the Holiday Inn Express Times Square, 210 rooms; Candlewood Suite Times Square, 188 rooms; Hampton Inn Times Square, 184 rooms; Hampton Inn Chelsea, 144 rooms; Hampton Inn Herald Square, 136 rooms, Holiday Inn Wall Street, 113 rooms and Holiday Inn Express Water Street, 112 rooms.

“We are pleased to close our previously announced joint venture with Cindat, and look forward to capitalizing on future opportunities within this venture with a sophisticated and strategic long-term partner,” says Neil Shah, Hersha president and COO.

“These seven high-quality, cash-flowing hotels, located in dynamic and diverse submarkets in Manhattan, will continue to benefit from strong demand for core real estate and lodging assets given the city’s preeminence as a global financial, cultural, and technological hub. Cindat’s investment expertise in global gateway market real estate—combined with Hersha’s fifteen-year track record of owning and operating hotels in the most valuable and liquid real estate market in the world—form a strong foundation for a long-term partnership,”

Adds Cindat CEO Greg Peng, “Demand for high-quality U.S. real estate assets is great from Chinese investors. Limited service hotels in Manhattan, in our opinion, offer steady cash flow with relatively low volatility, and hence, good risk-adjusted investment returns. Hersha is one of the best investors and managers in the hotel industry, and Cindat is very pleased to form this partnership with Hersha to grow its hotel investment portfolio in the US.”