Hersha Hospitality Trust (HT) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.2

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2004
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

     The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2004 is presented as if the acquisition of the Brookline Property had been consummated and leased as of January 1, 2004.

     This pro forma consolidated statement should be read in conjunction with the Hersha and Brookline Property historical financial statements and notes thereto. In management’s opinion, adjustments necessary to reflect the effects of the acquisitions have been made based on management’s best estimates.

     The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of Hersha would have been assuming such acquisition had been completed as of January 1, 2004, nor is it indicative of the results of operations for future periods.

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2004

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

	(A)			(B)
	Hersha			Brookline
	Hospitality Trust			Property			Combined			Adjustments			Pro Forma
Revenue:
Percentage Lease Revenues — HHMLP	$	1,192		$	—		$	1,192		$	—		$	1,192
Hotel Operating Revenues		49,370			7,817			57,187			—			57,187
Total Revenue		50,562			7,817			58,379			—			58,379
Operating Expenses:
Hotel Operating Expenses		31,557			3,635			35,192			—			35,192
Land Lease		779			—			779			39	(C)		818
Real Estate and Personal Property Taxes and Property Insurance		3,264			424			3,688			—			3,688
General and Administrative		3,200			435			3,635			—			3,635
Unrecognized Gain on Derivative		62			—			62			—			62
Depreciation and Amortization		7,194			1,336			8,530			385	(C)		8,915
Total Operating Expenses		46,056			5,830			51,886			424			52,310
Operating Loss		4,506			1,987			6,493			(424	)		6,069
Interest Income		241			—			241			—			241
Interest Income — Secured Loans Related Party		1,498			—			1,498			—			1,498
Interest Income — Secured Loans		693			—			693			—			693
Other Revenue		176			—			176			—			176
Interest Expense		(6,130	)		(1,206	)		(7,336	)		(1,560	) (D)		(8,896	)
Income (Loss) from continuing operations before income (loss) from joint venture investments, distributions to preferred unit holders and minority interests		984			781			1,765			(1,984	)		(219	)
Income from Unconsolidated Joint Venture Investments		481			—			481			—			481
Income (Loss) from continuing operations before distributions to preferred unit holders and minority interests		1,465			781			2,246			(1,984	)		262
Distributions to Preferred Unitholders		(499	)		—			(499	)		—			(499	)
Income (Loss) Allocated to Minority Interest in Continuing Operations		(126	)		—			(126	)		187	(E)		61
Income (Loss) from Continuing Operations	$	840		$	781		$	1,621		$	(1,797	)	$	(176	)
Earnings Per Share from Continuing Operations
Basic	$	0.05											$	(0.01	)
Diluted	$	0.05											$	(0.01	)
Weighted Average Common Shares Outstanding
Basic		16,391,805												16,391,805
Diluted		19,401,636												19,401,636

See notes to pro forma consolidated statement of operations

HERSHA HOSPITALITY TRUST

Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents Hersha’s audited Consolidated Statement of Operations for the year ended December 31, 2004 as filed on Form 10-K, excluding discontinued operations.
(B)	Represents the historical statement of operations for the Brookline Property for the year ended December 31, 2004 included in the audited financial statements of Webster Street Hotel, LLC.
(C)	Represents the adjustment to reflect the estimated depreciation on the property of the Brookline Property after the allocation of purchase price, net of the amounts recorded for depreciation in the historical statement of operations for the Brookline Property. This adjustment also reflects the amortization of purchase price allocated to an interest in a land lease, which is recorded as land lease expense. Depreciation and amortization are computed using the straight-line method and are based upon the estimated useful life of the asset. The pro forma adjustment is as follows:

	Purchase Price				Depreciation
	Allocated		Life		Expense
Building	$	47,350		40	$	1,184
Furniture & Fixtures		3,760		7		537
Total					$	1,721
Less: Brookline Property historical depreciation						(1,336	)
Pro forma depreciation						385
Land Lease amortization	$	3,570		91	$	39
Pro Forma Adjustment					$	424

(D) Represents the adjustment to reflect the estimated annual interest expense for the Brookline Property on proceeds from the mortgage payable and borrowings under the line of credit facility to finance the acquisition, net of interest expense included in the historical statement of operations for the Brookline Property. Included in the adjustment is amortization of deferred loan costs of $134 over the ten year term of the loan. The pro forma adjustment is as follows:

			Weighted			Estimated
			Average			Interest
	Principal		Interest Rate			Expense
Mortgages Payable	$	38,913		5.35	%		2,082
Line of Credit		15,604		4.30	%		671
Total						$	2,753
Amortization of deferred loan costs							13
Less: Brookline Property historical interest expense							(1,206	)
Pro Forma Adjustment						$	1,560

(E) Represents minority interest allocable to holders of units of limited partnership interest in our operating partnership. The cumulative minority interest effect of the Brookline Property is calculated by using the weighted average minority interest percentage of 15.5% for the year ended December 31, 2004, as follows:

Historical Brookline Property Net Income	$	(781	)
Depreciation and Amortization Pro Forma Adjustment		424
Interest Expense Pro Forma Adjustment		1,560
Total	$	1,203
Minority Interest Percentage		15.5	%
Pro Forma Minority Interest Adjustment	$	187

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Balance Sheet
As of March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

     The accompanying unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2005 is presented as if the acquisition of the Brookline Property occurred on March 31, 2005.

     This pro forma consolidated statement should be read in conjunction with the Hersha and Brookline Property historical financial statements and notes thereto. In management’s opinion, adjustments necessary to reflect the effects of the acquisition of the Brookline Property have been made based on management’s best estimate.

     The following unaudited Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position of Hersha would have been assuming such acquisition had been completed as of March 31, 2005, nor is it indicative of future financial positions of Hersha.

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Balance Sheet
As of March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

			(B)
	(A)		Brookline
	Historical		Property		Pro Forma
Assets:
Investment in Hotel Properties, net	$	171,990	$	51,110	$	223,100
Due from Related Party		27,849		—		27,849
Other Assets (includes hotel held for sale of $18,806)		56,428		3,407		59,835
Total Assets	$	256,267	$	54,517	$	310,784
Liabilities and Shareholders’ Equity:
Mortgages Payable	$	97,395	$	38,913	$	136,308
Other Liabilities (includes debt related to hotel assets held for sale of $12,952)		25,359		15,604		40,963
Total Liabilities		122,754		54,517		177,271
Minority Interest:		18,174		—		18,174
Shareholders’ Equity:		115,339		—		115,339
Total Liabilities and Shareholders’ Equity	$	256,267	$	54,517	$	310,784

See notes to pro forma consolidated balance sheet.

HERSHA HOSPITALITY TRUST

Notes and Management’s Assumptions to the
Pro Forma Consolidated Balance Sheet
As of March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents the unaudited Consolidated Balance Sheet of Hersha as of March 31, 2005 as filed on Form 10-Q.
(B)	Represents the purchase of the Brookline Property as if it had occurred on March 31, 2005 for $54,500 plus transaction expenses. The source of funding for the acquisition was a mortgage payable of $38,913; borrowings under Hersha’s existing line of credit of $15,604; and cash of $1,268.
	The following are based on a preliminary allocation of purchase price and cash paid in the acquisition:

Building		47,350
Furniture and Fixtures		3,760
Investment in Hotel Properties	$	51,110
Deferred Costs, net	$	133
Escrow Deposits		509
Land Leasehold		3,570
Other Assets		463
Cash and Cash Equivalents		(1,268	)
Other Assets	$	3,407

Included in Other Assets is purchase price allocated to an interest in a land lease in the amount of $3,570. The land lease has 91 years remaining and all future lease payments have been prepaid.

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

     The accompanying unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2005 is presented as if the acquisition of the Brookline Property had been consummated and leased as of January 1, 2005.

     This pro forma consolidated statement should be read in conjunction with the Hersha and Brookline Property historical financial statements and notes thereto. In management’s opinion, adjustments necessary to reflect the effects of the acquisitions have been made based on management’s best estimate.

     The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of Hersha would have been assuming such acquisition had been completed as of January 1, 2005, nor is it indicative of the results of operations for future periods.

HERSHA HOSPITALITY TRUST

Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

				(B)
	(A)			Brookline
	Historical			Property			Combined			Adjustments			Pro Forma
Revenue:
Percentage Lease Revenues — HHMLP	$	—		$	—		$	—		$	—		$	—
Hotel Operating Revenues		12,800			1,554			14,354			—			14,354
Total Revenue		12,800			1,554			14,354			—			14,354
Operating Expenses:
Hotel Operating Expenses		9,278			834			10,112			—			10,112
Land Lease		183			—			183			10	(C)		193
Real Estate and Personal Property Taxes and Property Insurance		883			123			1,006			—			1,006
General and Administrative		990			80			1,070			—			1,070
Unrecognized Gain on Derivative		(4	)		—			(4	)		—			(4	)
Depreciation and Amortization		1,963			305			2,268			125	(C)		2,393
Total Operating Expenses		13,293			1,342			14,635			135			14,770
Operating Loss		(493	)		212			(281	)		(135	)		(416	)
Interest Income		37			—			37			—			37
Interest Income — Secured Loans Related Party		1,000			—			1,000			—			1,000
Interest Income — Secured Loans		—			—			—			—			—
Other Revenue		27			—			27			—			27
Interest Expense		(1,875	)		(321	)		(2,196	)		(427	) (D)		(2,623	)
Loss from continuing operations before income (loss) from joint venture investments, distributions to preferred unit holders and minority interests		(1,304	)		(109	)		(1,413	)		(562	)		(1,975	)
Income from Unconsolidated Joint Venture Investments		49			—			49			—			49
Loss from continuing operations before distributions to preferred unit holders and minority interests		(1,255	)		(109	)		(1,364	)		(562	)		(1,926	)
Distributions to Preferred Unitholders		—			—			—			—			—
Loss Allocated to Minority Interest in Continuing Operations		261			—			261			82	(E)		343
Income from Continuing Operations	$	(994	)	$	(109	)	$	(1,103	)	$	(480	)	$	(1,583	)
Earnings Per Share from Continuing Operations
Basic	$	(0.05	)										$	(0.08	)
Diluted	$	(0.05	)										$	(0.08	)
Weighted Average Common Shares Outstanding
Basic		20,291,234												20,291,234
Diluted		23,133,671												23,133,671

See notes to pro forma consolidated statement of operations

HERSHA HOSPITALITY TRUST

Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2005
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents Hersha’s Consolidated Statement of Operations for the three months ended March 31, 2005 as filed on Form 10-Q, excluding discontinued operations.
(B)	Represents the historical statement of operations for the Brookline Property for the three months ended March 31, 2005, included in the financial statements of Webster Street Hotel, LLC.
(C)	Represents the adjustment to reflect the estimated depreciation on property of the Brookline Property after the allocation of purchase price, net of the amounts recorded for depreciation in the historical statement of operations for the Brookline Property. This adjustment also reflects the amortization of purchase price allocated to an interest in a land lease, which is recorded as land lease expense. Depreciation and amortization are computed using the straight-line method and are based upon the estimated useful life of the asset. The pro forma adjustment is as follows:

	Purchase Price				Depreciation
	Allocated		Life		Expense
Building	$	47,350		40	$	296
Furniture & Fixtures		3,760		7		134
Total					$	430
Less: Brookline Property historical depreciation						(305	)
Pro forma depreciation						125
Land Lease amortization	$	3,570		91	$	10
Pro Forma Adjustment					$	135

(D) Represents the adjustment to reflect the estimated three month interest expense for the Brookline Property on proceeds from the mortgage payable and borrowings under the line of credit facility to finance the acquisition, net of interest expense included in the historical statement of operations for the Brookline Property. Included in the adjustment is amortization of deferred loan costs of $134 over the ten year term of the loan. The pro forma adjustment is as follows:

			Weighted Average			Estimated Interest
	Principal		Interest Rate			Expense
Mortgages Payable	$	38,913		5.35	%		521
Line of Credit		15,604		5.75	%		224
Total						$	745
Amortization of deferred loan costs							3
Less: Brookline Property historical interest expense							(321	)
Pro Forma Adjustment						$	427

(E) Represents minority interest allocable to holders of units of limited partnership interest in our operating partnership. The cumulative minority interest effect of the Brookline Property is calculated by using the weighted average minority interest percentage of 12.3% for the three months ended March 31, 2005, as follows:

Historical Brookline Property Net Loss	$	109
Depreciation and Amortization Pro Forma Adjustment		135
Interest Expense Pro Forma Adjustment		427
Total	$	671
Minority Interest Percentage		12.3	%
Pro Forma Minority Interest Adjustment	$	82