Hersha Sells 3 Hotels, Acquires Westin Philadelphia
- Jul 24, 2017
Hersha Hospitality Trust completed its capital recycling campaign by selling three extended stay hotels for $130.5 million and acquiring the Westin Philadelphia for $135 million.
The Hyatt Trade
The company disposed of a portfolio consisting of three Hyatt House hotels, which were unencumbered of debt and generated taxable gains of $67 million. The hotels of the current transaction include the:
- 142-key Hyatt House in Pleasant Hill, Calif.
- 128-key Hyatt House in Pleasanton, Calif.
- 164-key Hyatt House in Scottsdale, Ariz.
“We have owned these hotels for 10 years and they have proven to be very productive investments,” said Jay Shah, CEO of Hersha, in prepared remarks. “The combined EBITDA generated at the three hotels at the time of sale was 60 percent above prior peak and 233 percent above the trough of 2010. We look to drive similar success from our most recent acquisitions in Philadelphia, Boston, Santa Monica, Seattle, and Miami.”
Earlier in the year, Hersha purchased the Pan Pacific Hotel in Seattle for $79 million and is operating the hotel as an independent property.
A Key Investment
Hersha purchased the AAA Four-Diamond 294-key Westin Hotel in Philadelphia, representing a purchase price of $459,000 per key and a LTM cap rate of 7.8 percent.
The Westin, located at 99 South 17th St., was originally opened as a Ritz-Carlton in 1990. The hotel features a business center, WestinWORKOUT Fitness Studio, a sauna, a juice bar, two restaurants, seven meeting spaces totaling 16,600 square feet and a 7,500-square-foot ballroom.
“Our Philadelphia cluster also includes The Rittenhouse Hotel and the Hampton Inn Convention Center and will benefit from increased economies of scale from this acquisition. The Westin’s superior asset quality and strong cash flow yield makes the investment immediately accretive to our portfolio FFO, NAV and RevPAR,” concluded Shah, in prepared remarks.
The property is part of the Liberty Place mixed-use complex that includes 2.4 million square feet of office, retail, food hall and residential space in addition to an underground parking garage.
Image courtesy of The Westin Philadelphia