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Hersha Hospitality Trust, a Philadelphia-based real estate investment trust, has announced plans to sell seven New York City hotels in a deal valued at $571.4 million.
Hersha will sell a majority stake in the hotels to China-based Cindat Capital Management in a joint venture. Cindat will possess a 70 percent stake in the joint venture, while Hersha will hold the remaining 30 percent.
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All seven hotels are located in Manhattan, including The Holiday Inn Express Times Square, the Candlewood Suites Times Square, the Hampton Inn Chelsea and the Holiday Inn Wall Street. The deal is expected to close by the end of March 2016.
Hersha's president and COO Neil Shah said the trust would use the money from the sale to invest elsewhere as well as repay debt.
"Hersha is pleased to enter into a joint-venture with Cindat for seven limited service hotels in Manhattan. The city's preeminence as a financial, cultural, and technological hub, combined with the security and scarcity of its real estate, provides significant yield for a strategic, long-term partner such as Cindat," said Shah in a statement. "On a pro forma basis, the sale reduces Hersha's EBITDA exposure in New York City from approximately 43.0 percent in 2015 to 25.0 percent of consolidated EBITDA in 2016.
"The Company intends to utilize a portion of the sale proceeds to make hotel investments in Washington DC and California, continue its share repurchase program and repay debt."
Cindat's purchase is just the latest in a string of sizable overseas investments from Chinese companies.
This winter's sale comes exactly one year after China's Sunshine Insurance agreed to acquire New York's 114-room Baccarat Hotel from the Starwood Capital Group in exchange for $230 million.
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Days later, Hilton Worldwide announced it had completed its sale of New York's iconic Waldorf Astoria to China's Anbang Insurance Group for a whopping $1.95 billion.
Hersha's portfolio comprises more than four dozen hotels and approximately 8,600 rooms spread across Boston, New York, Philadelphia and Washington DC, among other destinations.
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