Hersha Completes Transfer of Eight Hotel Leases

"With the TRS acquiring the leases, we will more closely align the interests of all involved parties through the management fee structure and together focus on improving the bottom line," says Jay H. Shah, president and COO of the locally based hospitality REIT. Hersha Hospitality Management will continue to operate the properties under long-term management contracts. "Compared to the original lease structure, the termination agreement allows the management company to operate the hotels to maximize profitability.

"We have been migrating all of our properties to our TRS over the past 18 months as part of a program to participate in the improvement of hotel fundamentals and to better align the owner/operator relationship," says Shah. "We are now well positioned to take advantage of the upside potential available in the current rebound in the hotel industry. In addition, the move will make the REIT's results more transparent and eliminate any future potential re-pricings for the properties. No cash consideration was paid to the lessee as part of the lease termination," he adds, "which underscores the alignment of interests between our management companies, affiliates, and the REIT."

As part of the lease termination, the entities that sold the eight hotels to Hersha have waived all purchase price adjustments in the original purchase agreements for each of the properties. The waivers eliminate potential liability for any future re-pricings of any properties owned by Hersha.

The eight hotels for which leases were terminated are: Holiday Inn Express in Long Island City, NY; Doubletree Club at JFK Airport, Jamaica, NY; Comfort Inn, Frederick, MD; Hampton Inn & Suites, Hershey, PA; Hampton Inn, Danville, PA; Holiday Inn Express & Suites, Harrisburg, PA, and Sleep Inn and Mainstay Suites in King of Prussia, PA.