GlobeSt.com UPDATE: Hersha Closes on Six of Nine Properties in $250M Waterford Portfolio

While this tranche contains the lion's share of the properties, they represent fewer than half of the 1,707 rooms in the portfolio. It is the first tranche of three. The next, planned to close this quarter, will contain two properties, and the third, set to close by year-end, will include the ninth. The full price of the JV' acquisition is $250 million.

Within the JV, Hersha's stake in the initial six and in the 409-key Marriott Hartford (CT) Downtown, which will represent the last tranche of the total transaction, is 66.7%, with Waterford retaining a 33.3% interest in these seven properties. The Hersha share of the portfolio's newly developed properties, which are the 392-key Hilton Hartford and the 133-key Mystic Residence Inn in Mystic, CT, is 50%. Hersha's in the JV's portfolio, is $142 million, Jay H. Shah, president and COO, tells GlobeSt.com.

This opening tranche encompasses the 285-key Mystic Marriott Hotel & Spa in Groton, CT; 78-key Danbury Residence Inn in Danbury, CT; 94-key Southington Residence in Southington, CT; 144-key Norwich Courtyard by Marriott and Rosemont Suites in Norwich, CT; 92-key Warwick Courtyard by Marriott in Warwick, RI, and 80-key Waterford SpringHill Suites in Waterford, CT.

Hersha plans to place $160 million of debt, split among the nine properties, by year-end, and Shah tells GlobeSt.com, two lenders are lined up. Calling the barriers to new competition in these markets "extraordinarily high," in a statement, Hasu P. Shah, Hersha's chairman and CEO, says, "We expect to achieve economies of scale due to their close proximity. We believe there is upside potential for these properties especially the two newly developed hotels."

Waterford will continue to manage the properties. Len Wolman, Waterford's chairman and CEO, cites the partnership's opportunity to leverage synergies. "Our goal is to expand the Waterford joint venture by actively pursuing new opportunities in the region with them," adds Jay Shah, noting that Hersha's strategy "is to own "premium-branded hotels in the Northeast and mid-Atlantic corridor."