Hersha Slows Pace of Acquisitions

"We are more focused on internal growth," he said, "particularly on average daily rate increases." Going forward, the company plans to exercise options to buy outstanding portions of properties it now owns in joint venture.

Since the end of 2005, it has acquired 17 properties and has an agreement to dispose of its non-core Atlanta portfolio. Since 2003, Shah said Hersha has followed "a deliberate assembly program," which shifted it from a Pennsylvania focus on mid-level properties to a portfolio of 63 nationally franchised, primarily upper-scale assets from Boston to Washington, DC. Earnings are now split 21% from New York assets, 20% from Boston, 19% from Philadelphia, 15% from Washington, DC, and the remaining 25% from Connecticut and Pennsylvania.

Meanwhile, total operating revenues rose 65.4% to $40.7 million during the third quarter, up from $24.6 million in the same quarter a year ago. Total earnings increased 76.3% to $16.4 million. Gross operating profit margin hit 47.9%, up from 46.5% in third quarter 2005.

Revenue per available room for 47 hotels that allow for year-to-year comparisons rose 10.2% to an average RevPAR of $94.31. The increase was driven by a 7.6% increase in average daily rates to $117.94 and a 2.4% improvement in occupancy to just shy of 80%.

At Sept. 30, the company had $460 million in outstanding total debt. During the call, Shah acknowledged that Hersha's debt leverage is higher than many of its peers. While the location of assets "in high barrier to entry urban markets and solid first-ring suburban office markets," and their strong performance, offers comfort with the debt level, he said, "there's no silver bullet, but we will continue to whittle away at debt." Approximately 91.7% of total debt is fixed rate, and the weighted average interest rate is approximately 6.47%, down from 6.55% at the end of this year's second quarter.

Shares of HT stock, which trades on the Amex, were trading at $10.85 by mid-day following the conference call on Nov. 7, down approximately 1% since the open of trading. The 52-week high was $11.23 per share, and the 52-week low was $8 per share.