Hersha Raises $33M to Pursue Acquisitions

The net proceeds will fund future acquisitions, "including acquisitions for which the company has a right of first refusal or option that it has obtained for newly developed hotels," according to a Hersha statement. This aligns with Hersha's recent pattern.

Hersha Development Corp., the REIT's affiliated development company, was the seller of two of Hersha's most recent acquisitions. The two properties, an 88-room Hilton Garden Inn in Gettysburg and a 73-room Comfort Inn in Frederick, MD, are brand new properties.

In another July transaction, Hersha joint-ventured with Woodbridge, NJ-based American Properties Realty to acquire the 130-room Courtyard by Marriott-Ewing in Hopewell, NJ, which was developed by American and opened in March 2004. At the time, Jay Shah, Hersha's president and COO, told GlobeSt.com it was his company's third acquisition from American. "Although we have no formal relationship during development, we … have a good relationship with them and others that allows us to acquire properties prior to, or just as they are listed." Another acquisition, the 120-suite Residence Inn by Marriott-Greenbelt in Maryland near Washington, DC accompanied the purchase of the Hopewell property.

In all, Hersha paid between $45 million and $55 million for its four July acquisitions, according to Shah. All are part of the company's strategy "of acquiring quality assets in high-barrier-to-entry metropolitan markets in the Northeast," he says, citing in particular the corridor between Boston and DC. The REIT's 2004 growth plan called for a doubling of its portfolio value by year-end.

Hersha trades under "HT" on the AMEX. At the open of the exchange on Tues. Sept. 21, HT shares were trading at $9.80. At that price, the new offering would raise more than $34 million, and the over-allotment would add approximately $5 million more. The HT 52-week high is $11.75 a share; the 52-week low, $8.41 a share.