Hersha Hospitality Trust sold a 70 percent majority interest in seven Manhattan hotels to Chinese investment firm Cindat Capital Management in deal worth $571.4 million, the Philadelphia-based hotel operator announced Thursday.
The deal involves seven limited service hotels in Times Square, Chelsea, Herald Square and the Financial District operating under the Holiday Inn, Hampton Inn and Candlewood Suites brands. The hotels hold 1,087 rooms in total, with Cindat paying $526,000 per key in the transaction.
The two sides will form a new partnership through which Cindat will be the preferred joint venture partner while Hersha retains a 30 percent equity interest. The transaction is expected to close before the end of the first quarter.
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Hersha expects $300 million in net proceeds from the sale, and plans to use taxable gains of $170 million to $180 million from the deal to acquire assets in a 1031 exchange.
The hotel company said it has already “accounted for a significant portion of the 1031 exchange,” announcing the acquisition of two Washington, D.C., hotels for a combined $156.5 million and its purchase of the Sanctuary Beach Resort in Monterey, Calif., for nearly $40 million.
Hersha will continue to fully own 10 other hotels totaling nearly 1,400 rooms in New York City, it said, including the Hyatt Union Square.
Cindat, a U.S. subsidiary of China Cinda Asset Management, recently acquired a $135 million equity stake in Bizzi & Partners Development’s planned luxury condo tower at 565 Broome Street in Soho. – Rey Mashayekhi