PHILADELPHIA Hersha Hospitality Trust has acquired the 152-key Capitol Hill Suites in Washington, D.C., for US$47.5 million, and the 191-key Delaware Park Hotel & Suites in New Castle, Delaware, for US$15 million.
The transactions represent valuations of US$312,000 per key and US$79,000 per key, respectively.
For Capitol Hill Suites, Hersha assumed a US$32.5 million loan with a 5.81% interest rate and cash on hand. Built in 1953, Capitol Hill Suites underwent a US$8 million renovation following its acquisition by AEW Capital Management from Starwood Hotels & Resorts Worldwide in 2007. The sale price at that time was US$38.1 million.
In New Castle, about six miles south of Wilmington, Hersha acquired a property that, despite being completed 11 years ago has yet to open. The original developer committed zoning violations that have since been rectified. Hersha anticipates launching it in the third quarter, flagged with an upper-upscale brand. Including costs to upfit and furnish, the total cost to Hersha is expected to be less than US$20 million.
Both deals are expected to close by the end of the first quarter.
Hersha has focused its acquisition strategy almost exclusively on the U.S. Northeast corridor, and Capitol Suites is the REIT’s eighth property in the Washington area. CEO Jay Shah says the region has strong economic and employment fundamentals that make acquisitions there especially attractive. “The strong real estate fundamentals are equally attractive, with high barriers to entry and negligible planned construction forecasted for several years, combined with growing demand,” Shah says. “We are particularly encouraged by the Capitol Hill submarket and our specific location, as it benefits from a wide variety of corporate and leisure demand generators related to the nation’s legislative and judicial institutions that are within blocks of the hotel.”