Real estate investment trust (REIT) Hersha Hospitality has acquired the remaining 50% interest it did not previously own in a Courtyard by Marriott located in Ewing, New Jersey, US.
The Courtyard Ewing, which has been accounted for as an unconsolidated joint venture investment since Hersha’s initial acquisition in 2004, will become a consolidated asset as of the third quarter of 2012.
Hersha Hospitality chief executive officer Jay Shah said gaining full control of the 130-room hotel will allow the company to maximise its investment as the sub-market recovery continues and the lodging cycle gains strength.
"Additionally, the advantageous location of the hotel provides it with consistent and accelerating demand from key corporate clients such as Bank of America-Merrill Lynch and BlackRock Financial Services," Shah added.
Hersha expects to generate less than 8% of its 2013 adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) from its portfolio of unconsolidated joint ventures, upon completion of the transaction.
The company, before closing the transaction, repaid the first mortgage loan secured by the Courtyard Ewing Hotel and entered into a new $9.15m revolving line of credit secured by a mortgage on the hotel.
The revolver bears interest at a rate of London Interbank Offered Rate (LIBOR) plus 3.50% with a floor of 4.25%, and matures in August 2014.
Hersha Hospitality, based in the US, owns 64 hotels in major urban gateway markets including New York, Washington, Boston, Philadelphia, Los Angeles and Miami, totalling 9,221 rooms.