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The deal is right in line with most transaction experts expectations for the remainder of 2011 portfolio cruise europe tour travel vacation sales will lead the transactions market recovery. Panelists at the third annual Hotel Data Conference in Nashville, Tennessee, earlier this month predicted more portfolio sales with buyers, especially REITs, broadening their interest to secondary and tertiary markets.
The 18 hotels transacted with Starwood cruise europe tour travel vacation Capital are all in secondary and tertiary cities in the eastern U.S. states. Hersha CFO Ashish R. Parikh told HotelNewsNow.com the REIT s future plans are to concentrate its portfolio to only urban, high-barrier-to entry markets.
These hotels cruise europe tour travel vacation are very good assets in very good locations, but the company over the past five years has gone from being secondary and tertiary owners cruise europe tour travel vacation to owning assets in the highest barrier-to-entry markets, he said. Most of these assets are considered non-core because they re not in urban markets.
Upon news today in the Wall Street cruise europe tour travel vacation Journal that Innkeepers cruise europe tour travel vacation USA Trust proposed buyer Cerberus cruise europe tour travel vacation Capital Management has put off closing the deal due to recent volatility in the financial markets , Parikh expressed confidence this portfolio sale will close.
As much as Starwood selected these assets, we selected cruise europe tour travel vacation Starwood Capital as the buyer in large part due to the fact that we felt the most comfortable with them, he said. Clearly there is a lot of volatility in the market, and we still have to get through the lender assumption process there is a lot of work still to get done. But as much as we could feel comfortable (about cruise europe tour travel vacation the deal closing), we do with them.
Most of Hersha Hospitality Trust s portfolio is operated by Hersha Hospitality Management, which is a separate, private entity, although it is 34% owned by trustees and officers of Hersha Hospitality Trust. Fourteen of the 18 hotels sold to Starwood Capital were managed by Hersha Hospitality Management and the remaining four were operated by Waterford Hospitality Group.
Parikh said the sale was not conditional on keeping current management contracts and he wasn t privy to information on whether Starwood Capital would break the existing management contracts cruise europe tour travel vacation or uphold them.
Typically we ve been net buyers, Parikh said. We ve never entered into an agreement to sell this many assets at one time. We ll continue to look for acquisition opportunities, but we ll selectively sell assets when they don t fit our plan.
Hersha said the 18 hotels are being sold at a trailing cruise europe tour travel vacation 12-month net operating income capitalization rate of approximately 8.4% and a trailing 12-month hotel earnings before interest, taxation, depreciation and amortization multiple of approximately 10.3 times. cruise europe tour travel vacation The average age of the non-core hotels to be sold approximates 11.5 years, and average daily rate for the consolidated non-core hotels in the second quarter cruise europe tour travel vacation of 2011 was US$107.01. That ADR is 32.2% less than the ADR for the remainder of Hersha s consolidated portfolio of 53 hotels.
Parikh said the deal is a win for both parties involved. It s strategically a good move for us and Starwood Capital is buying cruise europe tour travel vacation them at a good price, he said. Those hotels have a lot of life left in them.
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