PHILADELPHIA-Hersha Hospitality Trust has entered into a revolving credit loan and security agreement that provides a $60-million revolving line of credit. The lender is Cherry Hill, NJ-based Commerce Bank.

A $10-million portion of the line of credit is available on an unsecured basis, and the other $50 million on a secured basis. The line of credit expires on Dec. 31, 2008, and the bank can renew it for an additional year. This replaces a $35-million line of credit with Reading-based Sovereign Bank. "The new funding is at a better rate, and it's larger," CFO Ashish Parikh tells GlobeSt.com. "We've grown quite a bit in the last year, and this will accommodate current and, hopefully, future needs. It's also a bit more flexible." He confirms information in a Jan. 23 SEC filing stating that prime rate loans from the funding will bear interest at an annual rate equal to the sum of prime rate minus 0.50%, and Libor rate loans will bear interest at an annual rate equal to Libor plus 2.25%.

"Prime rate loans are at a floating rate, while a Libor loan fixes the rate for a limited time frame," Parikh explains. "If we want to borrow for up to 12 months or less, for instance, we can go with fixed." The proceeds are for working capital and general corporate purposes, including payment of distributions or dividends and additional hotel acquisitions.

The new revolving credit agreement follows an early-2006 buying spree by the locally based hospitality REIT. On Jan. 20, Hersha agreed to acquire three properties aggregating 534 keys for $76 million. On Jan. 10, it closed on a $41-million buy of three hotels with an aggregate of 339 keys.