Neil Shah, president and COO of Hersha Hospitality Trust (NYSE: HT), participated in a video interview in conjunction with Nareit’s REITweek: Virtual Investor Conference (held June 2-4).
Shah said that Hersha has been able to create continued value in energy maintenance through EarthView, its long-running sustainability program, while also remaining active in the social element of ESG practices in its communities.
“In a disruptive time like this, sometimes these innovative, next-generation kinds of ideas are almost easier to adopt because you can get everyone’s hearts and minds behind them,” he said.
Shah also discussed Rest Assured, Hersha’s new cleanliness platform, which uses evidence-based science to transform the REIT’s operational processes and new technologies, and ultimately create safe environments for its guests.
Shah said that Hersha’s portfolio is located in international, innovation-orientated gateway markets, so Hersha began feeling the impact of COVID-19 in mid- to late February. But, he said, Hersha was able to adapt by cutting expenses, suspending common and preferred dividends, reducing capex spending by $15 million across the portfolio, and closing hotels once they fell below 10% occupancy.
After working closely with its bank group, Hersha was able to announce a credit facility amendment in early April, Shah said. The amendment “gets us to the other side of this pandemic,” Shah said, including access to an extra $100 million of liquidity in case it’s needed.
“When you have very clean collateral that doesn’t have a lot of structure on it...the lenders were able to see value there and provide that kind of bridge to the other side until we start recovering,” Shah said.
Shah added that transient travel will recover from the pandemic much sooner than group travel, and that the earliest recovery will go to drive-to locations.