In order to develop the 93-room oceanfront tower, Hersha Hospitality Trust (HT - Snapshot Report), a self-advised real estate investment trust (REIT), recently announced that it is entering into a loan agreement worth $60.0 million. The loan, which is scheduled to mature in July 2016, bears a fixed interest rate of 4.32% and has a one-year extension option. As per the terms, the company will initially receive $45.0 million and have the option of drawing $5.0 million each at the interval of every 90 days.
The tower is being constructed on the land parcel adjacent to the company’s purchased hotel- Courtyard Miami Beach Oceanfront. The development activity, which started in May 2012, is expected to be completed by late 2013. The company expects to incur an estimated cost per room of $200,000.
Hersha Hospitality acquired the 263-room hotel and the adjacent land parcel for $95.0 million in November last year. The hotel is strategically located in the Mid-beach submarket of Miami and is in close proximity to convention center, Miami airport and other important locations. The property is the only franchised hotel of the world-class hotelier, Marriott International Inc. (MAR - Analyst Report), in the vibrant market of Miami Beach.
New Cumberland, Pennsylvania-based Hersha Hospitality focuses on upscale, mid-priced and extended stay hotels in major metropolitan markets in the U.S. The company currently owns 64 hotels totaling 9,221 rooms, primarily along the Northeast Corridor from Boston, Massachusetts to Washington DC. The company also owns hotels in Los Angeles, Northern California and Arizona.
Hersha Hospitality will likely release its second quarter 2012 earnings on July 29, 2012. The Zacks Consensus Estimate for the second quarter 2012 FFO (fund from operations) is pegged at 14 cents per share. We presently have a long-term Neutral recommendation on the stock. Also, it retains a Zacks #3 Rank (short-term Hold rating).