Hersha Hospitality Trust to sell Manhattan hotel for $37M
Hersha Hospitality Trust is selling Hotel 373 in midtown Manhattan to an offshore investment group for $37 million, or approximately $529,000 per room.
The Fifth Avenue hotel has 70 rooms, Hersha announced in a news release.
"The pricing on the sale of Hotel 373 is indicative of Manhattan's highly sought after real estate market, and underscores the quality and value of Hersha's New York City hotel portfolio. We believe the sale of Hotel 373 will narrow the gap between the private and public market value of the company's real estate," said Jay H. Shah, Hersha CEO.
The sale price values Hotel 373 at $1,680 per square foot, and on 2013 operating results, represents an economic capitalization rate of 5.2 percent and a hotel EBITDA multiple of 17.3x. The sale is expected to close during the second quarter of 2014, the release states, and is subject to customary closing conditions, including the completion of the buyer's due diligence.
With corporate offices in Harrisburg and Philadelphia, Hersha is a self-advised real estate investment trust that owns and operates upscale hotels in urban gateway markets. The company announced plans last year to shed noncore hotels from its portfolio.
"The transaction is a strong indication of continuing domestic and international interest from public and private groups seeking to acquire cash flowing real estate in top U.S. gateway markets," Shah said in a statement.
"We remain optimistic regarding the long-term prospects of the New York City hotel market, but we will continue to search for opportunities to divest high-yielding, stabilized assets and to redeploy the proceeds into higher-growth opportunities, or to pursue stock-buyback opportunities at periods when the stock price does not appropriately reflect value."
All stock buybacks, if any, will be made according to the previously announced program that was recently extended by the Hersha board through the end of 2014, the release states.