Hersha Hospitality Trust to Sell Non-Core Urban Select Service Properties for $505 Million

Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “We’re pleased to have reached an agreement that supports our long-term strategic objectives and delivers immediate shareholder value. With the sale of these non-core properties, we are able to continue our transformation by deepening our focus on our luxury & lifestyle and New York portfolios – both demonstrating resiliency coming out of the pandemic. Our resort markets and lifestyle properties continue to outperform – as reflected in our first quarter financial results announced yesterday – and our purpose-built New York City cluster, coupled with our unique operating model, positions us for strong performances across the recovery.”

The following Select Service Properties will be included in the transaction:

• Courtyard Brookline
• Hampton inn Philadelphia
• Hilton Garden Inn M Street
• Hampton Inn – Washington D.C.
• Courtyard Sunnyvale
• Courtyard Los Angeles Westside
• TownePlace Suites Sunnyvale

Hersha intends to use the proceeds from the sale of the USS Portfolio to provide immediate liquidity for a significant net debt reduction of approximately $460 - $480 million. In addition to approximately $390 - $410 million of corporate debt, the Company expects to reduce mortgage debt associated with the USS Portfolio by approximately $75 million, resulting in a pro forma consolidated leverage ratio of 4.9x-5.1x.¹ The Company also expects to recast its existing credit facility, which would eliminate all corporate-level debt maturities through 2024.

Following completion of the transaction, Hersha will own 26 hotels in six key destination markets across the U.S. On a pro forma basis, the remaining portfolio’s Total RevPAR based on 2019 actual performance would have increased from $206 to $219, total ADR would have increased from $247 to $262, and EBITDA per Key would have increased from approximately $32,000 to $33,000.

The transaction is expected to close in the third quarter of 2022, subject to customary closing conditions. The transaction is not subject to any financing conditions. Further details on the transaction can be found on the Company’s website at www.hersha.com.

First Quarter 2022 Financial Results and Conference Call
In a separate press release issued yesterday, Hersha announced financial results for the first quarter of 2022. The Company will host a conference call to discuss these results and this transaction at 9:00 AM Eastern Time on Thursday, April 28, 2022.

A live audio webcast of the conference call will be available on the Company’s website at www.hersha.com. The conference call can be accessed by dialing 1-844-200-6205 or 1-929-526-1599 for international participants and entering the passcode 245010 approximately 10 minutes in advance of the call. A replay of the call will be available from 11:00 AM Eastern Time on Thursday, April 28, 2022 through 11:59 PM Eastern Time on Saturday, May 28, 2022. The replay can be accessed by dialing 1-866 813-9403 or +44-204-525-0658 for international participants. The passcode for the replay is 607135. A replay of the webcast will be available on the Company’s website for a limited time.