Hersha Buys Five-Hotel Portfolio for $49M

The seller "had done a great job in selecting locations," Jay H. Shah, president and COO of the locally based hotel REIT, tells GlobeSt.com. "These are quality assets and you can't beat the locations. By plugging this portfolio into our cluster here, we expect strong results. We are purchasing these hotels below replacement value." Shah says the REIT will consummate the transactions with attractively priced debt without raising any additional equity. The amount and type of debt, he says, "are not final, since the transaction still remains to be closed." The hotels have recently undergone major repositioning and re-branding and Shah says Hersha will implement its proprietary management and marketing systems at all five locations.

The 155-suite Holiday Inn Express Hotel & Suites King of Prussia at 260 N. Gulph Rd. is across from King of Prussia Mall, within two miles of the Valley Forge historical sites and surrounded by 16 million sf of office space, including Merck, Prudential Insurance, Aetna and Lockheed Martin. Shah says it was built in 1983 and converted to a Holiday Inn Express in January of this year.

The 88-room Holiday Inn Express Oxford Valley is located at 3101 W. Cabot Blvd. in Bucks County, less than a mile from Sesame Place and Oxford Valley Mall. It was completed in 1997 and converted to a Holiday Inn Express in December 2004, according to Shah.

The 88-room Holiday Inn Express of Frazer-Malvern is located at One Morehall Rd. in Frazer, adjacent to Wyeth Pharmaceuticals and surrounded by eight million sf of office space. The property includes a restaurant pad site and additional land for development of a hotel, restaurant or office building. It was built in 1993 and converted to its current brand this January.

The 78-room Courtyard by Marriott Wilmington is at 320 Rocky Run Parkway near more than five million sf of office space, including DuPont and Cigna, and the cultural and leisure attractions in the Brandywine region. It and the adjacent 71-room McIntosh Inn at 300 Rocky Run Parkway were built in 1999. Of the latter, independently branded property, Shah says, "We'll take a look at either re-branding it to a premium national brand, or we may leave it as an independent. We would change the name even if we kept it independent."