Thursday, July 27, 2017

Hersha Hospitality Buys The Westin Hotel in Philadelphia

LaSalle Hotel Properties sold The Westin Hotel at 99 S. 17th St. in Philadelphia, PA for $135 million, or about $459,000 per room, to Hersha Hospitality Trust.

The seller acquired the asset from HEI Hotels & Resorts for $145 million ($493,000 /room) back in September 2010, according to CoStar data.

The 14-story, 240,006-square-foot hospitality building originally opened as the Ritz-Carlton in 1990 and was renovated in 2015. It sits on one acre in the Market Street West submarket, part of the mixed-use Liberty Place development and in close proximity to the new Comcast Innovation Tower, Rittenhouse Square, Pennsylvania Convention Center and University City. The Westin flag is operated under Starwood Hotels & Resorts Worldwide.

The hotel consists of 294 guest rooms including 19 suites, 16,600 square feet of meeting space and a 7,500-square-foot ballroom, on-site restaurant and bar/lounge/nightclub, subterranean parking garage, and boasts an 84-percent average occupancy and RevPAR at $188.73. In a statement, Hersha reported the Westin sale resulted in a 7.8% CAP rate based on LTM, and for fiscal year 2016 the hotel had an average daily rate (ADR) of $225.

The buyer financed the acquisition in-part with proceeds from the sale of three suburban Hyatt extended-stay properties on the West Coast that occurred around the same time and resulted in $130.5 million in net proceeds for the hospitality-focused REIT. Hersha's Philadelphia cluster also includes The Rittenhouse Hotel and the Hampton Inn Convention Center.

"The successful closing of this transaction marks the 24th month of our capital recycling campaign during which we sold approximately $850 million of mature, stabilized hotels and successfully deferred $270 million of taxable gains with $816 million of accretive acquisitions," said Jay H. Shah, CEO of Hersha. "In addition to refining our portfolio’s market mix to urban gateway and coastal destinations, our improved portfolio quality focuses our capabilities on hotels with higher RevPAR and EBITDA growth potential in our core markets. We are pleased to acquire the Westin at an attractive basis, expanding our Philadelphia cluster to include the leading corporate hotel in the market."

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