MIAMI—Hersha Hospitality Trust (HHM) has entered into a definitive agreement to purchase two Autograph Collection hotels in Miami’s South Beach. The purchase price for the South Beach Autograph Portfolio, which totals 145 rooms, is $50.95 million.
“The proposed acquisition of the South Beach Autograph Portfolio is a continuation of Hersha’s strategy to increase its presence in the Miami Beach submarket, following the non-core portfolio sale announced in September, and characterizes the company’s commitment to redeploy capital and invest in assets that deliver higher growth,” stated Jay H. Shah, Hersha’s CEO.
He added, “Both properties are of superior quality driven by significant transient demand in one of the country’s highest barriers to entry hotel markets. The South Beach Autograph Portfolio represents a unique opportunity to acquire two fully renovated properties in the highly desirable South Beach Market, and solidifies Hersha’s presence in Miami. Combined with the new tower opening at the Cadillac Courtyard Oceanfront, Hersha will control a significant portion of Marriott-branded assets on Miami Beach.”
The South Beach Autograph Portfolio includes the 75-room Blue Moon Hotel and the 70-room Winter Haven Hotel. The hotels underwent a $9-million renovation, completed in mid-2013, and are located in the South Beach Art Deco District. Upon closing of the transaction, the hotels will be managed by HHM.
HHM anticipates that the purchase price for the South Beach Autograph Portfolio reflects a full-year 2014 economic capitalization rate of approximately 6.8% and an 8.5% – 9.0% capitalization rate on stabilized earnings.
The acquisition of the South Beach Autograph Portfolio will be funded with cash on hand, and with a portion of the $138 million in net proceeds generated from the non-core portfolio sale. The South Beach Autograph Portfolio transaction is expected to close by the end of fourth quarter 2013, and is subject to a variety of closing conditions.