Hersha Hospitality Trust Provides Capital Allocation Update
February 17, 2021 at 16:15 PM EST
- $200 Million Unsecured Notes Placement -
PHILADELPHIA, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Hersha Hospitality Trust (NYSE: HT) (“Hersha” or the “Company”), owner of high-quality hotels in urban gateway markets and regional resort destinations, today announced it secured a strategic financing commitment from West Street Strategic Solutions Fund I, L.P. and Broad Street Credit Holdings LLC, each of which is an affiliate of the Merchant Banking business of The Goldman Sachs Group, Inc. (the “GS Purchasers”).
Private Notes Placement
Revolving Credit Facility and Term Loans Amended
“We are pleased to announce our unsecured notes placement with the GS Purchasers, the culmination of a robust and competitive process with a high-quality field of private institutional investors. We sought to address the Company’s financing and liquidity needs without diluting our shareholders -- this bespoke solution crafted with the GS Purchasers accomplished that. Additionally, we preserve the optionality to prepay this financing as early as the first quarter of 2022. This capital allows us to eliminate all term loan maturities until August 2022, and simultaneously amend the revolving credit facility agreement extending the financial covenant holiday. The completion of these capital transactions gives us the flexibility to clear our preferred dividend accrual and keep it current as we turn our immediate focus to operational performance as demand returns, and to accretive opportunities that emerge in the recovery,” stated Mr. Jay H. Shah, Hersha’s Chief Executive Officer.
Asset Sales Strategy Completed
These binding contracts, in addition to the previously announced sales of the Duane Street Hotel and Sheraton Wilmington, will generate net proceeds totaling $191.0 million, before customary closing costs. In conjunction with the proceeds from the committed GS Purchasers notes placement the Company will utilize portions of the Asset Sales proceeds to satisfy its 2021 Term Loan.
The sale of the Sheraton Wilmington closed on December 1, 2020. The sales of the Courtyard Downtown San Diego, Residence Inn Coconut Grove, Capitol Hill Hotel, and Holiday Inn Express Cambridge are forecasted to close by the end of the first quarter 2021 while the sale of the Duane Street Hotel is expected to close in the second quarter 2021.
Mr. Shah continued, “Our disposition strategy focused on generating efficiently priced liquidity by selling certain older, more mature assets from our various clusters that will require more capital investment in the coming two to three years relative to the rest of the portfolio. We owned these hotels for an average of 10.5 years and they proved to be successful investments for the Company, generating a net book gain of roughly $53 million over their hold period. The hotel sales represent a weighted average 11.7x multiple and a 7.5% capitalization rate on the six hotels’ total 2019 Hotel EBITDA and Net Operating Income, respectively. The transactions further hone the real estate value of our high-quality, purpose-built hotel portfolio and demonstrate the substantial investment appeal of hotels in urban gateway markets to sophisticated, institutional investors. We are pleased with the value retention and liquidity of our hotels during this extraordinary time.”
These transactions remain subject to customary closing conditions and no assurance can be given that the transaction will close within the expected time frame, or at all.
Citigroup Global Markets Inc. and Wells Fargo Securities, LLC act as Joint Lead Arrangers and Joint Bookrunners on the Company’s Bank Credit Facility and term loan agreements. Citibank, N.A. is the Administrative Agent and Wells Fargo Bank, N.A. is the Syndication Agent.
Citigroup Global Markets, Inc. served as placement agent in relation to the unsecured notes offering and Latham & Watkins LLP and Hunton Andrews Kurth LLP served as legal counsel.
The Company has posted a presentation of supplemental information detailing the Private Notes Placement, Revolving Credit Facility Amendment, and Announced Dispositions on its website in the Investor Relations section under “Presentations”.
Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high-quality hotels in urban gateway markets and regional resort destinations. The Company's 41 hotels totaling 6,495 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT”. For more information on the Company, and the Company’s hotel portfolio, please visit the Company's website at www.hersha.com
West Street Strategic Solutions Fund I, L.P. (WSSS I) is Goldman Sachs & Co. LLC’s $14 billion flagship alternative investing vehicle focused on direct origination of credit and structured equity opportunities across market conditions, with an emphasis on bespoke solutions for high quality borrowers. WSSS I is part of Goldman Sachs’ Merchant Banking Credit platform, which is one of the world’s largest alternative credit investing platforms with approximately $75 billion of assets under management as of December 31, 2020 and 25 years of credit investing experience.
Forward Looking Statement