Hersha, CNL Join Forces For Northeast Expansion

HARRISBURG, PA— With an eye on expanding their collective portfolios in the Northeast, Hersha Hospitality Trust and CNL Hospitality Properties are collaborating to form a joint venture with an estimated worth of some $150 million. The partnership offers Hersha access to one of the foremost sources of capital in the industry in CNL and an opportunity to seek further expansion on its mid-priced hotel portfolio. Meanwhile, for CNL the deal represents another step in its diversification strategy and an investment in Hershas management and development capabilities. CNL has invested $10 million in convertible preferred partnership units of Hersha Hospitality Limited Partnership, the operating partnership of Hersha Hospitality Trust. CNL will also be investing up to an additional $15 million in HLP and up to $40 million in a joint venture with HLP. The preferred partnership units and joint venture interests purchased and to be purchased by CNL are convertible into HT common shares at a price of $6.7555, the weighted average closing price of HT common stock for the last 20 trading days. CNL will own a majority limite d partnership interest in the joint venture. HT, for its part, will serve as the general partner of the collaboration, which will include potential acquisitions of newly built assets in strategic markets. Those markets include New York, Connecticut, Massachusetts, Philadelphia, New Jersey, Maryland, Washington DC, and Virginia. The Hilton, Marriott, and Six Continents are likely to be some of the brands used for the prospective properties.