Hersha Buying 260-Room Marriott for $48M

LOS ANGELES-Hersha Hospitality Trust of Philadelphia has signed a deal to acquire the 260-room Marriott Courtyard Westside in Los Angeles for $47.5 million, its first hotel in the L.A. market, and expects to complete the acquisition during the second quarter. The hotel, at 6333 Bristol Parkway in Culver City, was completely renovated and reopened as the Courtyard Westside in 2008 and includes approximately 11,000 square feet of meeting space.

Hersha says the deal works out to a first-year cap rate of approximately 8.3% and an expected stabilized cap rate of approximately 11%.

Hersha CEO Jay Shah, commenting on the deal in a prepared statement, called it “an acquisition in a well-located, high barrier-to-entry infill market.” He said the competing hotels consist primarily of older properties, “and we believe the Courtyard Westside is one of the best hotels in its market due to its high quality and desirable location within five miles of the Los Angeles airport and Marina del Rey.”

Shah cited Los Angeles hotel market statistics showing that the market “posted a strong year in 2010, and we expect it to be among the highest growth markets in the nation for the next several years.” Those figures include 15% year-over-year growth in RevPAR through April. Since 1995, Los Angeles has produced the second highest RevPAR growth in the country, behind only New York. Additionally, the market average RevPAR is still approximately 17% below its 2008 peak.

Hersha's acquisition of the Marriott Courtyard is subject to customary closing conditions, including receipt of franchisor approval, which the company anticipates obtaining. Its announcement regarding the deal called the Culver City submarket “an area that is home to a vibrant entertainment industry, a growing cultural district and a burgeoning employment center along with convenient transportation options.”