Hersha Hospitality Trust, owner of upscale hotels in urban gateway markets, has closed on the joint venture for seven of the Company’s premium limited service hotels in Manhattan with Cindat Capital Management Limited, a China based investment management.
The total purchase price, including closing and capital improvement costs, was $571.4 million, or $526,000 per key.
Cindat, backed by investors including China Cinda Asset Management Co. and Taikang Life Insurance and its affiliate, is the senior preferred joint venture partner holding a 70 percent ownership stake.
Hersha retains a 30 percent equity interest, as well as a $37 million preferred equity interest in the venture at a nine percent fixed coupon. “We are pleased to close our previously announced joint venture with Cindat, and look forward to capitalizing on future opportunities within this venture with a sophisticated and strategic long-term partner,ˮ Neil H. Shah, Hersha’s COO.
Greg Peng, Cindat’s Chief Executive Officer, said, “Demand for high-quality U.S. real estate assets is great from Chinese investors.
“Limited service hotels in Manhattan, in our opinion, offer steady cash flow with relatively low volatility, and hence, good risk-adjusted investment returns. Hersha is one of the best investors and managers in the hotel industry, and Cindat is very pleased to form this partnership with Hersha to grow its hotel investment portfolio in the U.S.”
Natixis Real Estate Capitalled a syndicate of international and domestic financial institutions and provided $285 million of senior acquisition financing to the joint venture. An affiliate of Oaktree Real Estate Finance provided $50 million of mezzanine financing.
Hunton & Williams served as legal counsel to Hersha while Sidley Austin served as legal counsel to Cindat. Both law firms collectively advised the newly formed joint venture. Solid Rock Advisors advised Cindat on the transaction.
The assets comprising the joint venture are Holiday Inn Express Times Square; Candlewood Suites Times Square; Hampton Inn Times Square; Hampton Inn Chelsea; Hampton Inn Herald Square; Holiday Inn Wall Street; Holiday Inn Express Water Street.