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PHILADELPHIA-Hersha Hospitality Trust has priced a secondary public offering of nearly 3.8 million shares of common stock at $9.75 a share. It anticipates net proceeds of about $35 million after underwriting discounts and commissions.

In addition, Hersha has granted underwriters a 30-day option to purchase up to 566,250 additional shares solely to cover any over-allotments, which could add about $5.5 million to the proceeds. The locally based REIT plans to use a portion of the proceeds to purchase the remaining two-thirds interest in its joint venture with Orlando-based CNL Hospitality Partners under which it acquired the Hampton Inn Manhattan-Chelsea on July 11. According to a Hersha SEC filing, the price of the remaining interest is about $25.4 million.

Additional portions of the stock sale will be used to repay outstanding debt under Hersha’s revolving credit line, a substantial amount of which is expected to be withdrawn on or before Oct. 9, according to a Hersha statement. A Sept. 14 SEC filing puts the balance of indebtedness on an $85-million revolving line of credit with Commerce Bank at approximately $42 million as of June 30.

The line of credit is secured by five wholly owned properties and one asset Hersha owns in joint venture. Borrowings currently accrue at a rate equal to the Wall Street Journal prime rate less 0.5% a year.

Still another portion of the stock proceeds will be used to fund development loans and for general corporate purposes. Neither CEO Jay Shah nor CFO Ashish Parikh was available for comment prior to publication time.

Shah has previously told GlobeSt.com that development loans are an integral part of the company’s growth strategy. Under this program it provides developers with funds for building new properties in exchange for a right of first refusal to acquire the assets although it is under no obligation to do so. In April, Hersha raised about $63 million in a public offering of common stock at $9 per share.

Raymond James & Associates Inc. is the book-running manager for the current secondary offering. Co-managers are Robert W. Baird & Co.; Stifel, Nicolaus & Co. Inc. and Wachovia Securities. At Amex market’s close Friday, shares of HT were trading at $9.80 per share, up 0.51% for the day.

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