Hersha Finds $9 Million for New Hotel
Hersha Hospitality Trust, a real estate investment trust and owner of nationally franchised, upscale and mid-scale hotels, today announced that it closed on a $9.0 million first mortgage construction loan for the development of a Homewood Suites by Hilton hotel in Glastonbury, Conn. The 136-room property, currently under construction, is being developed by PRA, a Philadelphia, Pa.-based commercial real estate developer and Hersha’s joint venture partner in the 150-room Hilton Garden Inn Glastonbury. The $9.0 million loan is Hersha’s second financing transaction with PRA and will be funded during the construction phase. The hotel is expected to open in the second quarter of 2006. “This loan is part of our successful joint venture program, which is designed to extend construction and mezzanine financing and preferred equity to our strategic partners at rates of return that are attractive to us,” said Jay H. Shah, Hersha’s president and chief operating officer. “In addition to being accretive to earnings, development and mezzanine financing secures HT’s first right on these cluster assets. As acquisition costs begin to exceed replacement costs in these transaction markets, this unique structure affords us the opportunity to secure premium assets, off market, in hard-to-source locations.”
All of the hotels financed in the program are located in strong northeastern markets with multiple demand generators and high barriers to new competition. The company currently has four other loans, aggregating $29.4 million, invested in hotel development projects at attractive rates. “We intend to continue to seek out appropriate development financing opportunities with our joint venture partners and developers who have a proven track record,” he said.