PHILADELPHIA-Hersha Hospitality Trust has announced a public offering of six million of its common shares. They began trading at $9.35 a share on the Amex on April 17. The locally based hospitality REIT has also granted the underwriters a 30-day option to purchase an additional 900,000 shares to cover over-allotments.

According to its SEC filing, Hersha estimates net proceeds of approximately $53 million, after deducting discounts, commissions and expenses. If the underwriters exercise their over-allotment option in full, based on $9.35 a share, the estimated net proceeds, would rise to about $61 million.

However, by mid-afternoon the day of the offering, shares of HT on the Amex had fallen approximately 3% since the opening bell and were trading at $9.06 a share. Hersha's filing indicated that a drop or rise of $1 per share following the offering could decrease or increase proceeds by $5.7 million, or by $9.5 million if the underwriters exercised the full over-allotment option.

Hersha plans to use the proceeds to repay outstanding debt on its revolving credit line, fund future acquisitions and for general corporate purchases. According to its SEC filing, the outstanding debt on its $60-million revolving credit line is approximately $39.4 million. The joint book-running managers are UBS Investment Bank and Merrill Lynch & Co. Wachovia Securities and Raymond James are co-lead managers of the offering.

As GlobeSt.com previously reported , Hersha obtained the credit line from Commerce Bank in late January. The new one replaced a $35-million line of credit "at a better rate," Ashish Parikh, CFO said at the time. The newer facility expires on Dec. 31, 2008 and can be renewed for an additional year. The remainder of the proceeds from the stock offering will be used to fund future acquisitions, including those of newly developed hotels for which Hersha has a right of first refusal or option to acquire, and for development loans.