Trust preferred securities are treated as debt under generally accepted accounting principles and for tax purposes, so they do not reduce earnings per share. These will mature on June 30, 2035, but the REIT has an option to redeem them beginning on June 30, 2010.
They call for quarterly distributions of interest by Hersha Statutory Trust I, a Delaware-based subsidiary of Hersha Hospitality LP, Hersha's operating partnership subsidiary. The quarterly distributions are payable at a fixed interest rate equal to 7.34% a year through June 30, 2010. After that, distributions are payable at a variable interest rate equal to Libor plus 3% a year.
Earlier this month Hersha paid McIntosh Inns Inc. $48.9 million in cash for a five-hotel portfolio with an aggregate of 480 rooms. All of the assets are in the Philadelphia and Wilmington, DE metropolitan areas, and, according to Jay H. Shah, Hersha's president and CEO, were acquired at below replacement value.
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