Hersha Completes $571 Million Sale of NYC Hotels
PHOTO: Times Square, New York City (photo courtesy of Thinkstock).
Hersha Hospitality Trust announced it has closed its sale of seven New York City hotels to a joint venture of itself and China's Cindat Capital Management Limited in deal valued at $571.4 million.
As a result, Cindat possesses a majority 70 percent ownership stake in the properties, while Philadelphia-based Hersha retains a 30 percent equity interest.
The seven premium limited service hotels are all located in Manhattan, boast a combined 1,087 rooms and include the Holiday Inn Express Times Square, the Candlewood Suites Times Square, the Hampton Inn Times Square, the Hampton Inn Chelsea, the Hampton Inn Herald Square, the Holiday Inn Wall Street and the Holiday Inn Express Water Street.
When Hersha first announced the deal in February 2016 it stated its plans were to put some of the sale proceeds toward "hotel investments in Washington DC and California, continue its share repurchase program and repay debt."
In a statement Monday, Hersha's President and COO Neil H. Shah said "these seven high-quality, cash-flowing hotels, located in dynamic and diverse submarkets in Manhattan, will continue to benefit from strong demand for core real estate and lodging assets given the city’s preeminence as a global financial, cultural, and technological hub."
"Demand for high-quality U.S. real estate assets is great from Chinese investors," said Cindat CEO Greg Peng in a statement. "Limited service hotels in Manhattan, in our opinion, offer steady cash flow with relatively low volatility, and hence, good risk-adjusted investment returns."
READ MORE: What Are Americans' Favorite Hotel Chains?
Now complete, the deal signals another sizable overseas investment from a Chinese company.
While the deal was pending, a Chinese consortium led by the Anbang Insurance Group made a bold play to acquire Starwood Hotels & Resorts Worldwide. And while the consortium ultimately withdrew its $14 billion bid, 2016 has already proven to be a notable year for Chinese investment in the U.S. hotel industry.
According to the Wall Street Journal, Chinese buyers have already agreed to $92.3 billion in overseas takeovers in 2016.
Just last week China's HNA Tourism Group agreed to acquire Carlson Hotels.
More by Patrick Clarke
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