Hersha, KSL Capital finalize acquisition

The REIT has now gone private, delisted from the NYSE

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HERSHA HOSPITALITY TRUST and KSL Capital Partners, LLC
Hersha Hospitality Trust and KSL Capital Partners, LLC, have finalized KSL’s acquisition of the REIT for approximately $1.4 billion. From left are Hersha Hospitality Trust’s Jay Shah, executive chairman; Neil Shah, CEO; and Marty Newburger, a partner at KSL Capital Partners.

HERSHA HOSPITALITY TRUST and KSL Capital Partners, LLC, have finalized KSL’s acquisition of the REIT for approximately $1.4 billion. As of Nov. 28, Hersha became a private company and was delisted from the New York Stock Exchange.

The companies entered a definitive merger agreement on Aug. 27 under which affiliates of KSL acquired all of the outstanding common shares of Hersha for $10 per share in an all-cash transaction. The companies filed paperwork with the Securities and Exchange Commission on Nov. 28 to make it official.

The independent transaction committee of Hersha’s board of trustees recommended the merger and the board unanimously approved it, according to Hersha. A special meeting of shareholders was held Nov. 8 to give final approval to the deal.

The purchase price represents a premium of approximately 60 percent over Hersha’s closing share price on Aug. 25, the last full trading day prior to the initial announcement, according to Hersha. Hersha shareholders will receive $10 in cash for each common share they own, and holders of Hersha’s 6.875 percent Series C Cumulative Redeemable Preferred Shares, 6.50 percent Series D Cumulative Redeemable Preferred Shares and 6.50 percent Series E Cumulative Redeemable Preferred Shares will receive $25 in cash, plus any accrued and unpaid dividends to which they are entitled, for each preferred share they own.

“This transaction provides our shareholders with immediate and certain value at a substantial premium to our public valuation,” said Jay Shah, Hersha’s executive chairman. “Following a multi-year comprehensive review by the independent transaction committee of Hersha’s board of trustees, the board and management team are confident this step will allow us to deliver value for our shareholders while refocusing on growing the business over a longer period of time.”

Hersha owns and operates luxury and lifestyle hotels in coastal gateway and resort markets. Its portfolio includes 25 hotels with 3,811 rooms in New York, Washington D.C., Boston, Philadelphia, South Florida and California.

“We are proud of the work our team has done to build on Hersha’s culture and capabilities and make the company what it is today,” Neil Shah, Hersha’s CEO, said. “This transaction is a result of our deliberate actions to focus on key gateway markets and lifestyle and leisure properties, as well as our work to create a concentrated portfolio consisting of some of the highest quality hotels in their respective markets.”

Hasu Shah, Hersha’s chairman emeritus, founded the company in 1984 with the purchase of a single hotel in Harrisburg, Pennsylvania. In 1998, the company went public as a REIT.