The Real Deal New York

Hersha Hospitality Trust reports strong fourth quarter for NYC hotels

February 21, 2013 05:30PM
By David Jones

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Hersha CEO Jay Shah and the Water Street Holiday Inn Express

Hersha Hospitality Trust is reporting a strong fourth quarter for its 15 New York City hotels, despite regulatory delays and setbacks related to Hurricane Sandy. Hersha officials, in a conference call with analysts, attributed the good showing – much improved from the last earnings report – to higher occupancy and higher room rates. The hotels, both boutique and full service, are in Midtown, Lower Manhattan, Brooklyn and Queens.

“The weaker-than-expected third quarter numbers were a momentary pause,” Jay Shah, chief executive of the Philadelphia-based trust, told analysts.

Companywide, Hersha reported funds from operations rose 42 percent to $23.4 million, up from $16,5 million in the 2011 fourth quarter. Revenue rose 30 percent, from $59 million to $98.5 million.

Revenue per available room in New York City rose 15 percent from the 2011 fourth quarter, up to $230.85 from $198.22. Occupancies rose from 91.3 percent to 92.9 percent.

Although Sandy did $700,000 worth of damage to Holiday Inn Express Water Street, Hersha recouped some of the loss when residents displaced by Sandy stayed at its hotels near John F. Kennedy International Airport. The Water Street property is set to reopen by the second quarter 2013.

Shah told analysts that several of the trust’s properties that had been scheduled to open in late 2012 or early this year will be delayed because of problems with permitting and supply shortages caused by fall’s bad weather.

“What is often a long development cycle has been stretched out even further by Sandy,” he said.

The trust confirmed it held off on deal to sell one of its Manhattan properties because of the storm.

Hersha is buying the stalled Hilton Garden Inn on 52nd Street and Third Avenue for $74 million. The closing should happen by the fourth quarter when construction is completed.

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