Boston, MA 05/14/2014 (wallstreetpr) – The institutional grade hotel REIT Hersha Hospitality Trust (NYSE:HT) intends to spend $100 million on an acquisition deal. The REIT has agreed to acquire Parrot Key Hotel & Resort that is located in Key West, Florida. The 148-room luxury resort is owned in a partnership that consists of the original developer Pitam Singh and Northwood Investors.
The luxury resort property in Key West that has now been earmarked for acquisition was developed in 2008 at the cost of $100 and Hersha is lucky to get it at that cost – $100 million, making it one of the favorable deals that the company has landed so far this year.
Premier property
The good news about Parrot Key Hotel & Resort acquisition deal goes beyond the cost, the property also enjoys good occupancy level at 92.3 percent with average daily rate (ADR) of about $230. The property’s revenue per available room (RevPAR) is projected to grow by 10 percent this year. As if that is not enough, the property that stands on a five-acre along the Florida Bay also recently underwent intensive renovation, and it boasts the largest guestrooms in the whole of Key West.
According to Hersha Hospitality Trust (NYSE:HT), Parrot Key Hotel & Resort will yet another premier facility to the company’s property portfolio especially at this time that portfolio rebalancing and enrichment is at the core of its growth agenda.
Financing the acquisition
Hersha Hospitality Trust (NYSE:HT) expects to fund the acquisition with both cash on hand and debt. The company has $500 million in senior unsecured credit that it can expand to $850 million.
However, given the size of the deal at $100 million, as to whether the purchase of the property signals a good move by Hersha remains debatable given that some market watchers believe that the company would have considered funding acquisitions from its own cash rather than debt. However, some experts also believe that the premier quality of Parrot Key Hotel & Resort is worth the cost regardless of whether the company uses its own cash or debt to fund the transaction.
