Hersha Hospitality’s Repositioning Efforts Aimed at Driving Better Value

Jay Shah, CEO of Hersha Hospitality Trust (NYSE: HT), participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.

Shah explained that over the last couple of years Hersha’s broader strategic plan has been to sell hotels that were a little older than the portfolio average and redeploy the proceeds into newer hotels that were more focused on coastal gateway markets and offered attractive growth trajectories.

Hersha has also spent about $150 million to $180 million investing in legacy hotels. During the last two years the REIT has repositioned close to eight hotels, putting them on track to drive better value, Shah said.

Turning to core markets, Shah noted that demand in Philadelphia is being driven by educational and research institutions.

Shah also commented on the reasons Hersha has opted for a bi-coastal, multi-segmented approach for its portfolio.

These markets generate close to 40 percent of the country’s GDP and have the greatest overall real estate appreciation, Shah explained. “The residual real estate values of the hotels, beyond the operating advantages that these markets bring, really helps drive the net asset value (NAV) of our portfolio.”

Shah added that Hersha is “generally quite agnostic” toward the segments in which it operates, “but we’re very focused on the markets.”

“By clustering hotels in these markets that cater to different consumer bases, we’re able to leverage our operating advantage in those markets and share insights across the portfolio at all different levels of the demand,” Shah said.