"We expect the next several quarters to be quite challenging," said Ashish Parikh, the firm's chief financial officer.
During the quarter, the company's 61 hotels, which are mainly concentrated in the Boston, New York City and Washington, DC areas, saw operating revenues increase 10.8%, to $72.7 million. But occupancy fell to 77.9% from 80.3% during the same year-ago period, as hotel operators held their room rates.
The company's $20-million development loan on a mixed-use development in Brooklyn, NY, on Gold Street, is in work-out mode, as the developer of the site is no longer paying interest. A Robert W. Baird analyst report says that Hersha's best option would be to take over the development of the hotel portion of the site itself or find another developer to build the asset.
Also in Brooklyn during the quarter, the company opened the 93-room NU Hotel. Last month it sold a Holiday Inn in New Cumberland, PA, for $6.5 million.
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