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PHILADELPHIA-The size of Hersha Hospitality Trust’s portfolio expanded 84% this year, primarily in the second quarter. This combined with continuing recovery in the hotel industry to propel second-quarter net income of the locally based hospitality REIT to nearly $3.8 million, up 159.3% over income of almost $1.5 million for the same quarter a year ago. Funds from operations increased 51% in this second quarter to just over $5.8 million up from nearly $3.9 million in second quarter 2004.

Revenue per available room increased 13.3%, and the portfolio’s average daily rate rose 4.6% to $105.19, while occupancy increased 8.3% to 77.3%. Acquisitions aside, same store performance also made a strong showing in second quarter. Among the hotels Hersha owned for the entire second quarter of both 2004 and 2005, RevPAR increased 10.2% to $74.73 in the most recent quarter; ADR was up 2.4% to $99.24, and occupancy rose 7.6% to 75.3%.

During a conference call, Jay Shah, president and COO, attributed the same-store results to “robustness in the corporate travel segment as well as the persisting strength in the leisure segment. Many of our hotels are relatively new and in the ramp-up phase,” he noted, “which is driving…strong growth in occupancy.”

Regarding the second half of the year, Shah said, “our rate of acquisition will really slow up. We have a lot to digest, and we’ll focus on internal growth as much as external growth,” tightening operations to continue strengthening occupancy, rates and RevPAR, he explained.

Having just raised $60 million in an offering of preferred shares that he said “was oversubscribed,” he did not rule out acquisitions, however. “We will continue to acquire in the Northeast and Middle Atlantic. But we will scrutinize carefully,” he said, noting that competition is aggressive and prices are rising.

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