WASHINGTON, DC—Hersha Hospitality Trust has entered into a purchase agreement for the 155-room St. Gregory Hotel & Suites for $57 million.

Based on the company's underwriting assumptions, Hersha anticipates a forward cap rate of 7% and EBITDA multiple of 7 12.9x.

The nine-story hotel is located at 21st and M Street NW. It had an average daily rate of $169.36 and occupancy of 89.5% in the trailing twelve months ending April 30, 2015. The rooms were renovated in Fall 2014.

The deal demonstrates Hersha's conviction in Washington, DC as the market recovers from a period of muted growth, Jay H. Shah, Hersha's CEO, said in a prepared statement.

Hersha plans to reposition it and introduce a new pricing strategy to leverage the demand for hotel space in that part of down. "The evolution of private and public sector demand drivers in Washington, DC over the past year provide excellent prospects for meaningful RevPAR growth over the long-term," he said.

The REIT is funding the acquisition with cash and proceeds from its $250 million senior unsecured credit facility. The acquisition includes the assumption of $25.8 million in mortgage debt that matures in September 2021.