PHILADELPHIA, PA – Hersha Hospitality Trust, owner of upscale hotels in urban gateway markets, today announced the Company has entered into a purchase agreement for the 155-room St. Gregory Hotel & Suites in Washington, DC for $57.0 million.
โThe high quality, well-located St. Gregory characterizes the type of strategic investment that we seek in our core markets. The hotel will be immediately accretive to our portfolioโs RevPAR and EBITDA growth and will further benefit from our pricing and positioning strategies. The independent upscale hotel affords operational flexibility to drive strong margin performance. Through Hershaโs active and aggressive asset management program, we will shift the hotelโs operational and sales strategies and reposition the asset to leverage growing demand in the vibrant DuPont Circle submarket. The acquisition of the St. Gregory also demonstrates our conviction in Washington, DC as the market recovers from a period of muted growth. The evolution of private and public sector demand drivers in Washington, DC over the past year provide excellent prospects for meaningful RevPAR growth over the long-term,โ stated Mr. Jay H. Shah, Hershaโs Chief Executive Officer.
The St. Gregory, which will join HTโs growing portfolio of independent hotels, is situated in Washington, DCโs DuPont Circle neighborhood at 21st and M Street NW and just steps away from Downtown and the West End. The hotel operated at an average daily rate (โADRโ) of $169.36 and occupancy of 89.5% in the trailing twelve months ending April 30, 2015. The nine-story building contains 155 rooms, 101 of which are suites with kitchens. The property features a restaurant and bar, 3,500 square feet of meeting space, exercise facilities and a 50-space underground parking facility. The hotelโs rooms were renovated in Fall 2014.
Based on the Companyโs underwriting assumptions, the Company anticipates the purchase price for the St. Gregory reflects a forward economic capitalization rate and EBITDA multiple of 7.0% and 12.9x, respectively.
The acquisition of the St. Gregory will be funded with cash on hand and proceeds from the Companyโs $250 million senior unsecured credit facility. The acquisition includes the assumption of $25.8 million in mortgage debt that matures in September 2021. The Company anticipates closing by the end of June 2015. However, the closing is subject to the satisfactory completion of the Companyโs due diligence and other customary closing conditions, including the receipt of lender consents. Therefore, no assurance can be given that the St. Gregory will be acquired on the terms described above or at all.