Hersha Hospitality Expands California Hotel Portfolio
Hersha Hospitality Trust bought the 145-room Marriott Sunnyvale from T2 Hospitality for $75M late last month. T2 originally purchased the site from Summerhill Homes in 2013 and later opened the Courtyard Marriott in 2014, according to the Silicon Valley Business Journal.
The hotel at 660 West El Camino Real includes an outdoor pool, a bistro, an exercise room, and a 500 SF boardroom and business center.
Hersha also signed a definitive agreement to acquire the fee simple 77-room Ambrose Hotel in Santa Monica. The company used proceeds from recent dispositions in New York City and suburban Boston toward these purchases, according to Hersha Hospitality CEO Jay H. Shah.
“Across the last several years, the company has invested approximately $350M in Northern and Southern California, compelled by the markets’ sound lodging fundamentals, which are supported by strong demand growth and limited new hotel supply constrained by the high cost of land and lengthy entitlement process,” Jay says.
The Courtyard Sunnyvale project includes the assumption of $20.6M CMBS debt maturing in 2025. The debt is interest-only until August 2020 at a fixed rate of 4.7%.
The Ambrose Hotel will be funded through 1031 exchange proceeds from the sale of two Boston suburban hotels at a blended trailing economic capitalization rate of 7.7%. The Boston transactions generated $18.6M in taxable gains. [SVBJ]