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Hersha Hospitality acquires Parrot Key Hotel & Resort for $100M

Hersha Hospitality announced that the company has entered into a definitive agreement to purchase the 148-room Parrot Key Hotel & Resort in Key West, FL for $100M. Parrot Key is situated on 5 oceanfront acres and is the most recently built waterfront hotel boasting the largest rooms and the most oceanfront suites in Key West. The hotel operated at an average daily rate of $230.52 and occupancy of 92.3% in 2013. The Key West market is currently forecasted as one of the strongest RevPAR growth markets in the country and the property is forecasting RevPAR growth in excess of 10% for 2014. Parrot Key was fully renovated in 2012 and requires no immediate capital expenditures. The property will continue to be independently operated and managed by Northwood Hospitality, while benefitting from Hersha’s active asset management program. The company anticipates the purchase price for Parrot Key reflects a trailing and forward 12-month economic capitalization rate, as of April 2014, of approximately 7.2% and 7.5%, respectively, and a 9.0% capitalization rate on stabilized earnings. For the trailing twelve months as of March 31, the hotel generated $7.5M in EBITDA or approximately $50,000 per room.