Cover page
Cover page - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 09, 2023 | |
Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-14765 | |
Entity Registrant Name | HERSHA HOSPITALITY TRUST | |
Entity Incorporation, State | MD | |
Entity Tax Identification Number | 25-1811499 | |
Entity Address, Street | 44 Hersha Drive | |
Entity Address, City | Harrisburg | |
Entity Address, State | PA | |
Entity Address, Postal Zip Code | 17102 | |
City Area Code | 717 | |
Local Phone Number | 236-4400 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001063344 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Common Shares of Beneficial Interest, par value $.01 per share | ||
Entity Information | ||
Title of each class | Class A Common Shares of Beneficial Interest, par value $.01 per share | |
Trading Symbol(s) | HT | |
Name of each exchange on which registered | NYSE | |
Entity Common Stock, Shares Outstanding (in shares) | 40,296,166 | |
6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | ||
Entity Information | ||
Title of each class | 6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | |
Trading Symbol(s) | HT-PC | |
Name of each exchange on which registered | NYSE | |
6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | ||
Entity Information | ||
Title of each class | 6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | |
Trading Symbol(s) | HT-PD | |
Name of each exchange on which registered | NYSE | |
6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | ||
Entity Information | ||
Title of each class | 6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share | |
Trading Symbol(s) | HT-PE | |
Name of each exchange on which registered | NYSE | |
Class B Common Shares | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding (in shares) | 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Investment in Hotel Properties, Net of Accumulated Depreciation | $ 1,176,444 | $ 1,189,239 |
Investment in Unconsolidated Joint Ventures | 4,068 | 4,989 |
Cash and Cash Equivalents | 146,145 | 224,955 |
Escrow Deposits | 4,948 | 5,065 |
Hotel Accounts Receivable | 6,111 | 8,922 |
Due from Related Parties | 232 | 245 |
Intangible Assets, Net of Accumulated Amortization of $1,300 and $1,211 | 598 | 684 |
Right of Use Assets | 16,612 | 16,226 |
Other Assets | 33,300 | 38,552 |
Total Assets | 1,388,458 | 1,488,877 |
Liabilities and Equity: | ||
Term Loans, Net of Unamortized Deferred Financing Costs (Note 6) | 346,686 | 370,636 |
Unsecured Notes Payable, Net of Unamortized Deferred Financing Costs (Note 6) | 50,935 | 50,895 |
Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs | 184,730 | 208,354 |
Lease Liabilities | 19,338 | 19,003 |
Accounts Payable, Accrued Expenses and Other Liabilities | 39,589 | 44,148 |
Dividends and Distributions Payable | 8,451 | 31,694 |
Due to Related Parties | 1,369 | 2,610 |
Total Liabilities | 651,098 | 727,340 |
Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 2) | 4,660 | 5,076 |
Shareholders' Equity: | ||
Preferred Shares: $.01 Par Value, 29,000,000 Shares Authorized, 3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E Shares Issued and Outstanding at September 30, 2023 and December 31, 2022, with Liquidation Preferences of $25.00 Per Share (Note 2) | 147 | 147 |
Accumulated Other Comprehensive Income | 10,968 | 16,213 |
Additional Paid-in Capital | 1,161,761 | 1,157,057 |
Distributions in Excess of Net Income | (514,917) | (490,815) |
Total Shareholders' Equity | 658,360 | 683,000 |
Noncontrolling Interests (Note 2) | 74,340 | 73,461 |
Total Equity | 732,700 | 756,461 |
Total Liabilities and Equity | $ 1,388,458 | $ 1,488,877 |
Other Liability, Related Party, Type [Extensible Enumeration] | Affiliated Entity [Member] | Affiliated Entity [Member] |
Class A Common Shares | ||
Shareholders' Equity: | ||
Common Shares | $ 401 | $ 398 |
Class B Common Shares | ||
Shareholders' Equity: | ||
Common Shares | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Intangible assets, accumulated amortization | $ 1,300 | $ 1,211 |
Shareholders' Equity: | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred shares - authorized (in shares) | 29,000,000 | 29,000,000 |
Preferred shares - outstanding (in shares) | 14,703,214 | 14,703,214 |
Preferred shares - liquidation preference value (in dollars per share) | $ 25 | $ 25 |
Series C | ||
Shareholders' Equity: | ||
Preferred shares - issued (in shares) | 3,000,000 | 3,000,000 |
Preferred shares - outstanding (in shares) | 3,000,000 | 3,000,000 |
Series D | ||
Shareholders' Equity: | ||
Preferred shares - issued (in shares) | 7,701,700 | 7,701,700 |
Preferred shares - outstanding (in shares) | 7,701,700 | 7,701,700 |
Series E | ||
Shareholders' Equity: | ||
Preferred shares - issued (in shares) | 4,001,514 | 4,001,514 |
Preferred shares - outstanding (in shares) | 4,001,514 | 4,001,514 |
Class A Common Shares | ||
Shareholders' Equity: | ||
Common shares - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares - authorized (in shares) | 104,000,000 | 104,000,000 |
Common shares - issued (in shares) | 40,104,916 | 39,697,451 |
Common shares - outstanding (in shares) | 40,104,916 | 39,697,451 |
Class B Common Shares | ||
Shareholders' Equity: | ||
Common shares - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares - authorized (in shares) | 1,000,000 | 1,000,000 |
Common shares - issued (in shares) | 0 | 0 |
Common shares - outstanding (in shares) | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Revenue: | |||||
Other Revenues | $ 93 | $ 107 | $ 236 | $ 239 | |
Total Revenues | 91,984 | 104,248 | 264,948 | 309,406 | |
Operating Expenses: | |||||
Insurance Recoveries in Excess of Property Losses | 0 | 0 | 0 | (962) | |
Hotel Ground Rent | 586 | 1,185 | 1,515 | 3,806 | |
Real Estate and Personal Property Taxes and Property Insurance | 6,767 | 7,561 | 19,207 | 24,379 | |
General and Administrative (including Share Based Payments of $2,339 and $2,768 and $7,088 and $8,608 for the three and nine months ended September 30, 2023 and 2022, respectively) | 6,049 | 5,883 | 16,751 | 17,692 | |
Loss on Impairment of Assets | 0 | 10,024 | 0 | 10,024 | |
Depreciation and Amortization | 13,794 | 14,900 | 41,469 | 51,179 | |
Total Operating Expenses | 83,618 | 102,212 | 245,997 | 285,220 | |
Operating Income | 8,365 | 2,036 | 18,950 | 24,186 | |
Interest Income | 1,516 | 101 | 4,950 | 103 | |
Interest Expense | (9,000) | (11,333) | (26,954) | (39,600) | |
Other Income | 341 | 467 | 1,327 | 260 | |
Gain on Disposition of Hotel Properties | 0 | 167,800 | 0 | 167,800 | |
Loss on Debt Extinguishment | 0 | (17,958) | (66) | (17,958) | |
Income (Loss) Before Results from Unconsolidated Joint Venture Investments and Income Taxes | 1,222 | 141,113 | (1,793) | 134,791 | |
Income (Loss) from Unconsolidated Joint Ventures | 5 | 478 | (421) | (101) | |
Income (Loss) Before Income Taxes | 1,227 | 141,591 | (2,214) | 134,690 | |
Income Tax Expense | (275) | (5,402) | (374) | (5,516) | |
Net Income (Loss) | 952 | 136,189 | (2,588) | 129,174 | |
Loss (Income) Allocated to Noncontrolling Interests - Common Units | 629 | (15,283) | 2,622 | (13,025) | |
Loss (Income) Allocated to Noncontrolling Interests - Consolidated Joint Venture | 0 | 615 | 416 | (2,349) | |
Preferred Distributions | (6,043) | (6,044) | (18,130) | (18,131) | |
Net (Loss) Income Applicable to Common Shareholders | $ (4,462) | $ 115,477 | $ (17,680) | $ 95,669 | |
BASIC | |||||
(Loss) Income from Continuing Operations Applicable to Common Shareholders (in dollars per share) | $ (0.11) | $ 2.92 | $ (0.45) | $ 2.43 | |
DILUTED | |||||
(Loss) Income from Continuing Operations Applicable to Common Shareholders (in dollars per share) | $ (0.11) | $ 2.82 | $ (0.45) | $ 2.35 | |
Weighted Average Common Shares Outstanding: | |||||
Basic (in shares) | 40,012,965 | 39,465,645 | 39,831,101 | 39,325,679 | |
Diluted (in shares) | [1] | 40,012,965 | 40,962,773 | 39,831,101 | 40,670,106 |
Room | |||||
Revenue: | |||||
Hotel Operating Revenues: | $ 70,159 | $ 81,473 | $ 202,321 | $ 244,847 | |
Operating Expenses: | |||||
Hotel Operating Expenses: | 15,487 | 17,892 | 45,494 | 51,929 | |
Food & Beverage | |||||
Revenue: | |||||
Hotel Operating Revenues: | 14,153 | 14,405 | 40,462 | 39,171 | |
Operating Expenses: | |||||
Hotel Operating Expenses: | 11,187 | 11,342 | 34,339 | 31,353 | |
Other Operating Revenues | |||||
Revenue: | |||||
Hotel Operating Revenues: | 7,579 | 8,263 | 21,929 | 25,149 | |
Operating Expenses: | |||||
Hotel Operating Expenses: | $ 29,748 | $ 33,425 | $ 87,222 | $ 95,820 | |
[1](Loss) Income allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because the effect of including these shares and units in the numerator and denominator would have no impact. In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to (loss) income applicable to common shareholders. The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Common Units and Vested LTIP Units 5,685,932 5,153,282 5,766,093 5,227,200 Unvested Stock Awards and LTIP Units Outstanding 1,773,472 — 1,268,817 — Contingently Issuable Share Awards 380,566 — 632,437 — Total Potentially Dilutive Securities Excluded from the Denominator 7,839,970 5,153,282 7,667,347 5,227,200 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share Based Compensation Expense | $ 2,339 | $ 2,768 | $ 7,088 | $ 8,608 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,839,970 | 5,153,282 | 7,667,347 | 5,227,200 |
Common Units and Vested LTIP Units | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,685,932 | 5,153,282 | 5,766,093 | 5,227,200 |
Unvested Stock Awards and LTIP Units Outstanding | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,773,472 | 0 | 1,268,817 | 0 |
Contingently Issuable Share Awards | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 380,566 | 0 | 632,437 | 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net Income (Loss) | $ 952 | $ 136,189 | $ (2,588) | $ 129,174 |
Other Comprehensive Income | ||||
Change in Fair Value of Derivative Instruments | (2,747) | 5,935 | (6,103) | 26,777 |
Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income (Loss) | 46 | (136) | 98 | (875) |
Total Other Comprehensive (Loss) Income | (2,701) | 5,799 | (6,005) | 25,902 |
Comprehensive (Loss) Income | (1,749) | 141,988 | (8,593) | 155,076 |
Less: Comprehensive Loss (Income) Attributable to Noncontrolling Interests - Common Units | 968 | (15,943) | 3,382 | (16,064) |
Less: Comprehensive Loss (Income) Attributable to Noncontrolling Interests - Consolidated Joint Venture | 0 | 615 | 416 | (2,349) |
Less: Preferred Distributions | (6,043) | (6,044) | (18,130) | (18,131) |
Comprehensive (Loss) Income Attributable to Common Shareholders | $ (6,824) | $ 120,616 | $ (22,925) | $ 118,532 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Class A Common Shares | Class B Common Shares | Total Equity | Total Shareholders' Equity | Common Shares | Common Shares Class A Common Shares | Common Shares Class B Common Shares | Preferred Shares | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Distributions in Excess of Net Income | Noncontrolling Interests | Noncontrolling Interests Common Shares |
Beginning balance at Dec. 31, 2021 | $ 2,310 | |||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | 2,349 | |||||||||||||
Ending balance at Sep. 30, 2022 | 4,659 | |||||||||||||
Balance at the beginning at Dec. 31, 2021 | $ 608,296 | $ 557,050 | $ 394 | $ 0 | $ 147 | $ 1,155,034 | $ (6,211) | $ (592,314) | $ 51,246 | |||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 39,325,025 | |||||||||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 14,703,214 | |||||||||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 6,926,253 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Issuance Costs/Other | (42) | (47) | (47) | $ 5 | ||||||||||
Unit Conversion | 0 | 848 | 1 | 847 | $ (848) | |||||||||
Unit Conversion (in shares) | 130,627 | (130,627) | ||||||||||||
Dividends and Distributions declared: | ||||||||||||||
Preferred Shares | (18,131) | (18,131) | (18,131) | |||||||||||
Common Shares | (1,988) | (1,988) | (1,988) | |||||||||||
Common Units | (88) | $ (88) | ||||||||||||
LTIP Units | (262) | $ (262) | ||||||||||||
Share Based Compensation: | ||||||||||||||
Grants | 2 | (2) | ||||||||||||
Grants (in shares) | 175,117 | 194,427 | ||||||||||||
Amortization | 8,608 | 2,730 | 2,730 | $ 5,878 | ||||||||||
Change in Fair Value of Derivative Instruments | 25,902 | 25,902 | 22,863 | 22,863 | 3,039 | |||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | (2,349) | (2,349) | (2,349) | |||||||||||
Net Income (Loss) | 129,174 | 129,174 | 116,149 | 116,149 | 13,025 | |||||||||
Balance at the ending at Sep. 30, 2022 | 749,120 | 677,125 | 397 | 0 | $ 147 | 1,156,213 | 16,652 | (496,284) | $ 71,995 | |||||
Balance at the ending (in shares) at Sep. 30, 2022 | 39,630,769 | |||||||||||||
Balance at the ending (in shares) at Sep. 30, 2022 | 14,703,214 | |||||||||||||
Balance at the ending (in shares) at Sep. 30, 2022 | 6,990,053 | |||||||||||||
Beginning balance at Jun. 30, 2022 | 5,274 | |||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | (615) | |||||||||||||
Ending balance at Sep. 30, 2022 | 4,659 | |||||||||||||
Balance at the beginning at Jun. 30, 2022 | 612,124 | 557,177 | 396 | 0 | $ 147 | 1,154,367 | 11,426 | (609,159) | $ 54,947 | |||||
Balance at the beginning (in shares) at Jun. 30, 2022 | 39,514,661 | |||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2022 | 14,703,214 | |||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2022 | 7,070,680 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Issuance Costs/Other | 6 | $ 6 | ||||||||||||
Unit Conversion | 0 | 423 | 1 | 422 | $ (423) | |||||||||
Unit Conversion (in shares) | 80,627 | (80,627) | ||||||||||||
Dividends and Distributions declared: | ||||||||||||||
Preferred Shares | (6,044) | (6,044) | (6,044) | |||||||||||
Common Shares | (1,987) | (1,987) | (1,987) | |||||||||||
Common Units | (88) | $ (88) | ||||||||||||
LTIP Units | (262) | (262) | ||||||||||||
Share Based Compensation: | ||||||||||||||
Grants (in shares) | 35,481 | |||||||||||||
Amortization | 2,768 | 809 | 809 | 1,959 | ||||||||||
Change in Fair Value of Derivative Instruments | (6,005) | 5,799 | 5,226 | 5,226 | 573 | |||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | 615 | 615 | 615 | |||||||||||
Net Income (Loss) | 136,189 | 136,189 | 120,906 | 120,906 | 15,283 | |||||||||
Balance at the ending at Sep. 30, 2022 | 749,120 | 677,125 | 397 | 0 | $ 147 | 1,156,213 | 16,652 | (496,284) | $ 71,995 | |||||
Balance at the ending (in shares) at Sep. 30, 2022 | 39,630,769 | |||||||||||||
Balance at the ending (in shares) at Sep. 30, 2022 | 14,703,214 | |||||||||||||
Balance at the ending (in shares) at Sep. 30, 2022 | 6,990,053 | |||||||||||||
Beginning balance at Dec. 31, 2022 | 5,076 | |||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | (416) | |||||||||||||
Ending balance at Sep. 30, 2023 | 4,660 | |||||||||||||
Balance at the beginning at Dec. 31, 2022 | $ 756,461 | 756,461 | 683,000 | 398 | 0 | $ 147 | 1,157,057 | 16,213 | (490,815) | $ 73,461 | ||||
Balance at the beginning (in shares) at Dec. 31, 2022 | 39,697,451 | 0 | 39,697,451 | |||||||||||
Balance at the beginning (in shares) at Dec. 31, 2022 | 14,703,214 | 14,703,214 | ||||||||||||
Balance at the beginning (in shares) at Dec. 31, 2022 | 6,940,053 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Issuance Costs/Other | (118) | (118) | (118) | |||||||||||
Unit Conversion | 0 | 1,814 | 2 | 1,812 | $ (1,814) | |||||||||
Unit Conversion (in shares) | 200,000 | (200,000) | ||||||||||||
Dividends and Distributions declared: | ||||||||||||||
Preferred Shares | (18,131) | (18,131) | (18,131) | |||||||||||
Common Shares | (6,005) | (6,005) | (6,005) | |||||||||||
Common Units | (263) | $ (263) | ||||||||||||
LTIP Units | (942) | $ (942) | ||||||||||||
Dividend Reinvestment Plan | 91 | 91 | 91 | |||||||||||
Dividend Reinvestment Plan (in shares) | 11,907 | |||||||||||||
Share Based Compensation: | ||||||||||||||
Grants | 1 | (1) | ||||||||||||
Grants (in shares) | 195,558 | 1,297,419 | ||||||||||||
Amortization | 9,784 | 2,504 | 2,504 | $ 7,280 | ||||||||||
Change in Fair Value of Derivative Instruments | $ 5,799 | (6,005) | (5,245) | (5,245) | (760) | |||||||||
Adjustment to Record Noncontrolling Interest at Redemption Value | 416 | 416 | 416 | |||||||||||
Net Income (Loss) | (2,588) | (2,588) | 34 | 34 | (2,622) | |||||||||
Balance at the ending at Sep. 30, 2023 | $ 732,700 | 732,700 | 658,360 | 401 | 0 | $ 147 | 1,161,761 | 10,968 | (514,917) | $ 74,340 | ||||
Balance at the ending (in shares) at Sep. 30, 2023 | 40,104,916 | 0 | 40,104,916 | |||||||||||
Balance at the ending (in shares) at Sep. 30, 2023 | 14,703,214 | 14,703,214 | ||||||||||||
Balance at the ending (in shares) at Sep. 30, 2023 | 8,037,472 | |||||||||||||
Beginning balance at Jun. 30, 2023 | $ 4,660 | |||||||||||||
Ending balance at Sep. 30, 2023 | 4,660 | |||||||||||||
Balance at the beginning at Jun. 30, 2023 | 740,563 | 666,711 | 401 | 0 | $ 147 | 1,161,282 | 13,330 | (508,449) | $ 73,852 | |||||
Balance at the beginning (in shares) at Jun. 30, 2023 | 40,103,391 | |||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2023 | 14,703,214 | |||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2023 | 8,037,472 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Issuance Costs/Other | (11) | (11) | (11) | |||||||||||
Dividends and Distributions declared: | ||||||||||||||
Preferred Shares | (6,043) | (6,043) | (6,043) | |||||||||||
Common Shares | (2,006) | (2,006) | (2,006) | |||||||||||
Common Units | (88) | $ (88) | ||||||||||||
LTIP Units | (314) | (314) | ||||||||||||
Dividend Reinvestment Plan | 9 | 9 | 9 | |||||||||||
Dividend Reinvestment Plan (in shares) | 1,525 | |||||||||||||
Share Based Compensation: | ||||||||||||||
Amortization | 2,339 | 481 | 481 | 1,858 | ||||||||||
Change in Fair Value of Derivative Instruments | (2,701) | (2,701) | (2,362) | (2,362) | (339) | |||||||||
Net Income (Loss) | 952 | 952 | 1,581 | 1,581 | (629) | |||||||||
Balance at the ending at Sep. 30, 2023 | $ 732,700 | $ 732,700 | $ 658,360 | $ 401 | $ 0 | $ 147 | $ 1,161,761 | $ 10,968 | $ (514,917) | $ 74,340 | ||||
Balance at the ending (in shares) at Sep. 30, 2023 | 40,104,916 | 0 | 40,104,916 | |||||||||||
Balance at the ending (in shares) at Sep. 30, 2023 | 14,703,214 | 14,703,214 | ||||||||||||
Balance at the ending (in shares) at Sep. 30, 2023 | 8,037,472 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Dividends [Abstract] | ||||
Common shares, dividends declared (in dollars per share) | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.05 |
Common units, distributions declared (in dollars per share) | 0.05 | 0.05 | 0.15 | 0.05 |
LTIP units, distribution per unit (in dollars per share) | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.05 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities: | ||
Net (Loss) Income | $ (2,588) | $ 129,174 |
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: | ||
Gain on Disposition of Hotel Properties | 0 | (167,800) |
Loss on Impairment of Assets | 0 | 10,024 |
Insurance Recoveries in Excess of Property Loss | 0 | (962) |
Junior Note PIK Interest Added to Principal | 0 | 1,855 |
Depreciation | 41,379 | 50,965 |
Amortization | 1,981 | 3,984 |
Loss on Debt Extinguishment | 66 | 17,958 |
Equity in Loss of Unconsolidated Joint Ventures | 421 | 101 |
Loss (Gain) Recognized on Change in Fair Value of Derivative Instrument | 98 | (875) |
Share Based Compensation Expense | 7,088 | 8,608 |
(Increase) Decrease in: | ||
Hotel Accounts Receivable | 2,811 | 1,726 |
Other Assets | (1,581) | (4,152) |
Due from Related Parties | 13 | 2,353 |
Increase (Decrease) in: | ||
Due to Related Parties | (1,241) | (239) |
Accounts Payable, Accrued Expenses and Other Liabilities | (963) | 12,577 |
Net Cash Provided by Operating Activities | 47,484 | 65,297 |
Investing Activities: | ||
Capital Expenditures | (29,390) | (17,936) |
Proceeds from Disposition of Hotel Properties | 0 | 382,699 |
Contributions to Unconsolidated Joint Ventures | 0 | (485) |
Proceeds from Insurance Claims | 0 | 1,294 |
Distributions from Unconsolidated Joint Ventures | 500 | 0 |
Net Cash (Used in) Provided by Investing Activities | (28,890) | 365,572 |
Financing Activities: | ||
Repayments on Line of Credit | 0 | (118,684) |
Proceeds of Term Loan Borrowing | 0 | 400,000 |
Payments on Term Loans | (25,000) | (497,481) |
Principal Repayment of Mortgages | (23,928) | (159,923) |
Deferred Financing Costs | (99) | (4,052) |
Cash Paid for Debt Extinguishment | 0 | (10,143) |
Dividends Paid on Common Shares | (25,742) | 0 |
Dividends Paid on Preferred Shares | (18,131) | (18,131) |
Distributions Paid on Common Units and LTIP Units | (4,621) | 0 |
Net Cash Used in Financing Activities | (97,521) | (408,414) |
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | (78,927) | 22,455 |
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period | 230,020 | 84,945 |
Cash, Cash Equivalents, and Restricted Cash - End of Period | $ 151,093 | $ 107,400 |
COMPANY OVERVIEW AND MERGER AGR
COMPANY OVERVIEW AND MERGER AGREEMENT | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
COMPANY OVERVIEW AND MERGER AGREEMENT | COMPANY OVERVIEW AND MERGER AGREEMENT The accompanying unaudited consolidated financial statements of Hersha Hospitality Trust (“we,” “us,” “our” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and with the general instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period. Accordingly, readers of these consolidated interim financial statements should refer to the Company’s audited financial statements prepared in accordance with US GAAP, and the related notes thereto, for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as certain footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from this report pursuant to the rules of the Securities and Exchange Commission. We are a self-administered Maryland real estate investment trust that was organized in May 1998 and completed our initial public offering in January 1999. Our common shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “HT.” We own our hotels and our investments in joint ventures through our operating partnership, Hersha Hospitality Limited Partnership (“HHLP” or “the Partnership”), for which we serve as the sole general partner. As of September 30, 2023, we owned an approximate 83.3% partnership interest in HHLP, including a 1.0% general partnership interest. The Merger Agreement On August 27, 2023, Hersha Hospitality Trust and HHLP entered into an Agreement and Plan of Merger (the “Merger Agreement”), with 1776 Portfolio Investment, LLC (“Parent”), 1776 Portfolio REIT Merger Sub, LLC, a wholly owned subsidiary of Parent (“REIT Merger Sub”), and 1776 Portfolio OP Merger Sub, LP, a subsidiary of Parent (“OP Merger Sub” and, together with Parent and REIT Merger Sub, the “Parent Parties”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, OP Merger Sub will be merged with and into HHLP (the “Partnership Merger”, and such surviving entity, the “Surviving Partnership”) and, immediately following the Partnership Merger, the Company shall be merged with and into REIT Merger Sub (the “Company Merger” and, together with the Partnership Merger, the “Mergers”). Upon completion of the Company Merger, REIT Merger Sub will survive as a wholly owned subsidiary of Parent and the separate existence of the Company will cease. The Company Merger and the other transactions contemplated by the Merger Agreement were approved and declared advisable by the board of trustees of the Company (the “Company Board”) and the Transaction Committee of the Company Board (the “Company Transaction Committee”). Merger Consideration Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Company Merger (the "Company Merger Effective Time) (A) each Priority Class A common share of beneficial interest, $0.01 par value per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $10.00 per share; (B) each 6.875% Series C Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share plus accrued and unpaid dividends, if any, up to and including the date on which the closing takes place (the "Closing Date"), without interest; (C) each 6.50% Series D Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share plus accrued and unpaid dividends, if any, up to and including the Closing Date, without interest; and (D) each 6.50% Series E Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share plus accrued and unpaid dividends, if any, up to and including the Closing Date, without interest. At the effective time of the Partnership Merger (the "Partnership Merger Effective Time"), each Company Partnership Unit (as defined in the Merger Agreement) issued and outstanding immediately prior to the Partnership NOTE 1 - COMPANY OVERVIEW AND MERGER AGREEMENT (CONTINUED) Merger Effective Time (other than Excluded Units) will be converted into the right to receive an amount in cash equal to the Per Company Share Merger Consideration, without interest (the “OP Merger Consideration”). Company Equity Awards Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Company Merger Effective Time, each award of restricted Company Common Shares granted under the Company’s Amended and Restated 2012 Equity Incentive Plan (each a “Company Restricted Share Award”) that is outstanding immediately prior to the Company Merger Effective Time will vest, and each Company Restricted Share Award will be canceled and converted into the right to receive a payment (without interest and subject to applicable tax withholding) equal to the number of Company Common Shares underlying such Company Restricted Share Award at $10.00 per share. At the Partnership Merger Effective Time, each Company LTIP Unit that is outstanding and unvested as of immediately prior to the Partnership Merger Effective Time shall vest and become transferable and immediately thereafter, the Company shall cause a Forced Conversion (as defined in the Merger Agreement) with respect to all Company LTIP Units then eligible for conversion (after giving effect to the vesting of all Company LTIP Units as described in in the Merger Agreement) such that, as of the Partnership Merger Effective Time, each then outstanding Company LTIP Unit will be converted into an equal number of common Company Partnership Units (with such converted Company Partnership Units treated in the same manner under the Merger Agreement as other outstanding Company Partnership Units). Closing Conditions The consummation of the Mergers is subject to certain customary closing conditions, including, among others, the approval of the Company Merger by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Shares entitled to vote on the Company Merger (the “Company Shareholder Approval”) and the other transactions contemplated by the Merger Agreement. The special meeting of shareholders (the “Special Meeting”) was held on November 8, 2023 in which the Company Shareholder Approval was obtained and other transactions proposed as part of the Mergers received a majority affirmative vote. The obligations of the parties to consummate the Mergers are not subject to any financing condition or the receipt of any financing by the Parent Parties. The Merger Agreement provides that, unless Parent otherwise notifies the Company in writing, the closing of the Mergers will not occur prior to November 28, 2023. Representations, Warranties and Covenants The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants by the Company to conduct its business in the ordinary course consistent with past practice, subject to certain exceptions, during the period between the execution of the Merger Agreement and the Company Merger Effective Time. The Merger Agreement also requires the Company to convene and hold a shareholders’ meeting for the purpose of obtaining the Company Shareholder Approval, which, as noted above, was held on November 8, 2023. Termination of the Merger Agreement; Termination Payment The Merger Agreement contains customary termination rights, including, among others, the right of either Parent or the Company to terminate the Merger Agreement if the Company Merger Effective Time has not occurred on or before 5:00 p.m. (Eastern Time) on February 27, 2024 (the “End Date”), if any Governmental Entity (as defined in the Merger Agreement) of competent jurisdiction has issued a final, non-appealable order permanently enjoining or otherwise prohibiting the consummation of the Mergers, or the Company Shareholder Approval has not been obtained upon a vote taken at the shareholders’ meeting or any adjournment or postponement thereof. The Merger Agreement also may be terminated by the Company under certain circumstances, including if, prior to obtaining the Company Shareholder Approval and after following certain procedures and adhering to certain restrictions, the Company Board (or a committee thereof) effects a Company Change of Recommendation in respect of a Company Superior Proposal and the Company pays Parent the Company Termination Payment (as defined below) or due to certain uncured material breaches of the Merger Agreement by any of the Parent Parties that causes certain conditions to the Closing not to be satisfied. In addition, Parent may terminate the Merger Agreement under certain circumstances and subject to certain restrictions, including if, prior to obtaining the Company NOTE 1 - COMPANY OVERVIEW AND MERGER AGREEMENT (CONTINUED) Shareholder Approval, the Company Board or Company Transaction Committee effects a Company Change of Recommendation or due to certain uncured material breaches of the Merger Agreement by the Company or Company OP that causes certain conditions to the Closing not to be satisfied. In certain specified circumstances further described in the Merger Agreement, in connection with the termination of the Merger Agreement, the Company will be required to pay Parent a termination fee of $30.0 million. In addition, in certain specified circumstances further described in the Merger Agreement, in connection with the termination of the Merger Agreement, Parent will be required to pay the Company a termination fee of $67.5 million upon termination of the Merger Agreement, including if the Company terminates the Merger Agreement as a result of the Parent Parties’ failure to close when otherwise obligated pursuant to the Merger Agreement or as a result of an uncured material breach of the Merger Agreement by the Parent Parties that causes certain conditions to the Closing not to be satisfied or as a result of the Closing not having occurred by the End Date in circumstances, in each case where the Company could have terminated as a result of the Parent Parties’ failure to close when otherwise obligated pursuant to the Merger Agreement. Dividends Pursuant to the terms of the Merger Agreement, the Company may declare and pay regular quarterly dividends and HHLP may declare and pay regular quarterly distributions, in each case, subject to certain limitations. The Company and HHLP may not pay dividends or distributions other than the Company Permitted Dividend without the written consent of Parent, except as necessary to preserve the Company’s tax status as a real estate investment trust or to avoid the imposition of income or excise taxes, subject to certain limitations. The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 28, 2023. Commitments and Guarantees The Parent Parties have obtained debt and equity commitments for the transactions contemplated by the Merger Agreement, the aggregate proceeds of which will be sufficient for the Parent Parties to pay all amounts the Parent Parties may be obligated to pay pursuant to the Merger Agreement or the Mergers, including the Merger Consideration, the Preferred Merger Consideration and the OP Merger Consideration and all related fees and expenses. Certain entities affiliated with the Parent Parties have committed to fund Parent, prior to or substantially concurrently with the Closing, with aggregate equity contributions in an amount equal to $400 million, subject to the terms and conditions set forth in such equity commitment letter, dated as of August 27, 2023. The Parent Parties have delivered to the Company an executed debt commitment letter pursuant to which the lenders party thereto have committed to provide debt financing to Parent in an aggregate amount up to $1.05 billion, subject to the terms and conditions set forth in such debt commitment letter, dated as of August 27, 2023, to enable Parent to consummate the Mergers and make payments required under and in connection with the Merger Agreement. In addition, certain entities affiliated with the Parent Parties have entered into a limited guarantee for certain other payment obligations of the Parent Parties under the Merger Agreement in favor of the Company (the “Limited Guarantee”), up to an aggregate amount equal to $75.0 million, subject to the terms and conditions of the Limited Guarantee. NOTE 1 - COMPANY OVERVIEW AND MERGER AGREEMENT (CONTINUED) Going Concern Consideration Our secured term loan which has a principal balance of $347,853 as of September 30, 2023 will mature on August 4, 2024, and five of our mortgages totaling $184,952 mature in the next twelve months. Our current and anticipated liquidity is less than the principal balance of these obligations. As noted above, we anticipate that the closing of the transactions contemplated by the Merger Agreement will occur in the fourth quarter of 2023, subject to the closing conditions. Should the transactions contemplated by the Merger Agreement not close as anticipated, we fail to repay or refinance the debt noted above, or obtain a waiver or amendment for the debt, an event of default could occur. The occurrence of these events requires participation of third parties. As a result, we have concluded that substantial doubt exists about our ability to continue as a going concern. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Principles of Consolidation and Presentation The accompanying consolidated financial statements have been prepared in accordance with US GAAP and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned Taxable REIT Subsidiary Lessee (“TRS Lessee”), 44 New England Management Company. All significant inter-company amounts have been eliminated. Consolidated properties are either wholly owned or owned less than 100% by the Partnership and are controlled by the Company as general partner of the Partnership. Properties owned in joint ventures are also consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (“VIE”) or we maintain control of the asset through our voting interest in the entity. Variable Interest Entities We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. Based on our examination, there have been no changes to the operating structure of our legal entities during the three and nine months ended September 30, 2023 and, therefore, there are no changes to our evaluation of VIE's as presented within our annual report presented on Form 10-K for the year ended December 31, 2022. Noncontrolling Interest We classify the noncontrolling interests of our common units of limited partnership interest in HHLP (“Common Units”), and Long Term Incentive Plan Units (“LTIP Units”) as equity. LTIP Units are a separate class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances. The noncontrolling interest of Common Units and LTIP Units totaled $74,340 as of September 30, 2023 and $73,461 as of December 31, 2022. As of September 30, 2023, there w ere 8,037,472 Common Units and LTIP Units outstanding with a fair market value of $79,249 , based on the price per share of our common shares on the NYSE on such date. In accordance with the partnership agreement of HHLP, holders of these Common Units may redeem them for cash unless we, in our sole and absolute discretion, elect to issue common shares on a one-for-one basis in lieu of paying cash. As noted in Note 1 - Company Overview and Merger Agreement, at the Company Merger date, each Company LTIP Unit that is outstanding and unvested shall vest and become transferable and immediately thereafter, the Company shall cause a Forced Conversion (as defined in the Merger Agreement) with respect to all Company LTIP Units then eligible for conversion (after giving effect to the vesting of all Company LTIP Units as described in the Merger Agreement) such that, as of the Partnership Merger Effective Time, each then outstanding Company LTIP Unit will be converted into an equal number of common Company Partnership Units (with such converted Company Partnership Units treated in the same manner under the Merger Agreement as other outstanding Company Partnership Units). Net income or loss attributed to Common Units and LTIP Units is included in net income or loss but excluded from net income or loss applicable to common shareholders in the consolidated statements of operations. NOTE 2 - BASIS OF PRESENTATION (CONTINUED) We are party to a joint venture that owns the Ritz-Carlton Coconut Grove, FL, in which our joint venture partner has a noncontrolling equity interest of 15% in the property. Hersha Holding RC Owner, LLC, the owner entity of the Ritz-Carlton Coconut Grove joint venture ("Ritz Coconut Grove"), will distribute income based on cash available for distribution which will be distributed as follows: (1) to us until we receive a cumulative return on our contributed senior common equity interest, currently at 8%, and (2) then to the owner of the noncontrolling interest until they receive a cumulative return on their contributed junior common equity interest, currently at 8%, and (3) then 75% to us and 25% to the owner of the noncontrolling interest until we both receive a cumulative return on our contributed senior common equity interest, currently at 12%, and (4) finally, any remaining operating profit shall be distributed 70% to us and 30% to the owner of the noncontrolling interest. Additionally, the noncontrolling interest in the Ritz Coconut Grove has the right to put their ownership interest to us for cash consideration at any time during the life of the venture. The balance sheets and financial results of the Ritz Coconut Grove are included in our consolidated financial statements and the book value of the noncontrolling interest in the Ritz Coconut Grove is classified as temporary equity within our Consolidated Balance Sheets. For Ritz Coconut Grove, income or loss is allocated using Hypothetical Liquidation at Book Value ("HLBV method") as the liquidation rights and priorities, as defined by the venture's governing agreement, differs from the underlying percentage ownership in the venture. The Company applies the HLBV method using a balance sheet approach. A calculation is prepared at each balance sheet date to determine the amount that we would receive if the venture entity were to liquidate all of its assets at carrying value and distribute that cash to the joint venture based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is our share of the earnings or losses and the remainder is allocated to noncontrolling interest. The noncontrolling interest in the Ritz Coconut Grove is measured at the greater of historical cost or the put option redemption value, and is recorded as part of the (Income) Loss Allocated to Noncontrolling Interests - Consolidated Joint Venture line item within the Consolidated Statements of Operations. The value of the noncontrolling interest at the put option redemption value was $4,660 as of September 30, 2023. Shareholders’ Equity Terms of the Series C, Series D, and Series E Preferred Shares outstanding at September 30, 2023 and December 31, 2022 are summarized as follows: Dividend Per Share Shares Outstanding Nine Months Ended September 30, Series September 30, 2023 December 31, 2022 Aggregate Liquidation Preference Distribution Rate 2023 2022 Series C 3,000,000 3,000,000 $ 75,000 6.875 % $ 1.2891 $ 1.2891 Series D 7,701,700 7,701,700 $ 192,500 6.500 % $ 1.2188 $ 1.2188 Series E 4,001,514 4,001,514 $ 100,000 6.500 % $ 1.2188 $ 1.2188 Total 14,703,214 14,703,214 NOTE 2 - BASIS OF PRESENTATION (CONTINUED) As noted in Note 1 - Company Overview and Merger Agreement, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Company Merger Effective Time, (A) each Priority Class A common share of beneficial interest, $0.01 par value per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $10.00 per share; (B) each 6.875% Series C Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share plus accrued and unpaid dividends, if any, up to and including the Closing Date, without interest; (C) each 6.50% Series D Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share plus accrued and unpaid dividends, if any, up to and including the Closing Date, without interest; and (D) each 6.50% Series E Cumulative Redeemable Preferred Share of Beneficial Interest, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Company Merger Effective Time (other than Excluded Shares) will be automatically converted into the right to receive an amount in cash equal to $25.00 per share per share plus accrued and unpaid dividends, if any, up to and including the Closing Date, without interest. Investment in Hotel Properties Investments in hotel properties are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life of up to 40 years for buildings and improvements, and two These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in hotel properties we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis. Identifiable assets, liabilities, and noncontrolling interests related to hotel properties acquired are recorded at fair value. Estimating techniques and assumptions used in determining fair values involve significant estimates and judgments. These estimates and judgments have a direct impact on the carrying value of our assets and liabilities which can directly impact the amount of depreciation expense recorded on an annual basis and could have an impact on our assessment of potential impairment of our investment in hotel properties. We consider a hotel to be held for sale when management and our independent trustees commit to a plan to sell the property, the property is available for sale, management engages in an active program to locate a buyer for the property and it is probable the sale will be completed within a year of the initiation of the plan to sell. We evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. We generally include the operations of a hotel that was sold or a hotel that has been classified as held for sale in continuing operations unless the sale represents a strategic shift that will have a major impact on our future operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition. NOTE 2 - BASIS OF PRESENTATION (CONTINUED) Based on the occurrence of certain events or changes in circumstances, we review the recoverability of the property’s carrying value. Such events or changes in circumstances include the following: • a significant decrease in the market price of a long-lived asset; • a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; • a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator; • an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; • a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and • a current expectation that, it is more likely than not that, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. We review our portfolio on an ongoing basis to evaluate the existence of any of the aforementioned events or changes in circumstances that would require us to test for recoverability. In general, our review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value expected, as well as the effects of hotel demand, competition and other factors. Other assumptions used in the review of recoverability include the holding period and expected terminal capitalization rate. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in hotel properties. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
INVESTMENT IN HOTEL PROPERTIES | INVESTMENT IN HOTEL PROPERTIES Investment in hotel properties consists of the following at September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Land $ 390,532 $ 390,532 Buildings and Improvements 1,107,687 1,093,575 Furniture, Fixtures and Equipment 216,477 203,369 Construction in Progress 8,309 7,105 1,723,005 1,694,581 Less Accumulated Depreciation (546,561) (505,342) Total Investment in Hotel Properties * $ 1,176,444 $ 1,189,239 * The net book value of investment in hotel property at Ritz Coconut Grove, which is a variable interest entity, is $36,176 and $37,303 at September 30, 2023 and December 31, 2022, respectively. Acquisitions For the nine months ended September 30, 2023 and 2022, we acquired no hotel properties. Hotel Dispositions During the year ended December 31, 2022 , we had the following hotel dispositions: Hotel Acquisition Disposition Consideration Gain on Urban Select Service (7 hotels) June 2005 - October 2016 8/4/2022, 10/26/22 $ 505,000 $ 170,193 Hotel Milo Santa Barbara 02/28/2014 10/06/2022 55,000 25,784 Pan Pacific Seattle 02/21/2017 10/19/2022 70,000 1,532 Gate hotel JFK Airport 06/13/2008 11/02/2022 11,000 — 2022 Total $ 197,509 |
INVESTMENT IN UNCONSOLIDATED JO
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | 9 Months Ended |
Sep. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | INVESTMENT IN UNCONSOLIDATED JOINT VENTURES As of September 30, 2023 and December 31, 2022, our investment in unconsolidated joint ventures consisted of the following: Joint Venture Hotel Properties Percent Owned September 30, 2023 December 31, 2022 SB Partners, LLC Holiday Inn Express, South Boston, MA 50 % * $ — $ — SB Partners Three, LLC Home2 Suites, South Boston, MA 50 % 4,068 4,989 $ 4,068 $ 4,989 *In the third quarter of 2023, we received a $500 non-refundable deposit from our joint venture partner to buy our 50% interest. The deposit will be credited against the purchase price at closing, which we anticipate will occur in the fourth quarter of 2023, subject to customary closing conditions. Income/Loss Allocation Income or loss is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. This results in an income allocation consistent with our percentage of ownership interests. When we absorb cumulative losses equal to our accounting basis in the joint venture, our investment balance is $0 as presented in the table above. Any difference between the carrying amount of any of our investments noted above and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets. Income (Loss) recognized during the three and nine months ended September 30, 2023 and 2022 for our investments in unconsolidated joint ventures is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Hiren Boston, LLC* $ — $ 394 $ — $ 436 SB Partners, LLC — — — (310) SB Partners Three, LLC 5 84 (421) (227) Income (Loss) from Unconsolidated Joint Venture Investments $ 5 $ 478 $ (421) $ (101) *On November 30, 2022, we sold our 50% membership interest in Hiren Boston, LLC. The following tables set forth the total assets, liabilities, equity and components of net income or loss, including the Company’s share, related to the unconsolidated joint ventures discussed above as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022. Balance Sheets September 30, 2023 December 31, 2022 Assets Investment in Hotel Properties, Net $ 44,247 $ 47,356 Other Assets 12,131 11,803 Total Assets $ 56,378 $ 59,159 Liabilities and Equity Mortgages $ 49,304 $ 50,236 Other Liabilities 10,196 10,012 Equity: Hersha Hospitality Trust 1,613 2,630 Joint Venture Partner(s) (4,735) (3,719) Total Equity (3,122) (1,089) Total Liabilities and Equity $ 56,378 $ 59,159 Statements of Operations Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Room Revenue $ 5,668 $ 8,166 $ 13,003 $ 17,661 Other Revenue 208 405 531 909 Operating Expenses (2,854) (4,156) (7,182) (10,239) Lease Expense (159) (320) (478) (834) Property Taxes and Insurance (417) (588) (1,170) (1,732) General and Administrative 7 (71) 78 (107) Depreciation and Amortization (1,041) (1,244) (3,184) (3,746) Interest Expense (851) (923) (2,490) (2,364) Income Tax Expense (140) (114) (140) (62) Net Income (Loss) $ 421 $ 1,155 $ (1,032) $ (514) The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of September 30, 2023 and December 31, 2022. September 30, 2023 December 31, 2022 Our share of equity recorded on the joint ventures' financial statements $ 1,613 $ 2,630 Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures (1) 2,455 2,359 Investment in Unconsolidated Joint Ventures $ 4,068 $ 4,989 (1) Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements. |
OTHER ASSETS
OTHER ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS Other Assets Other Assets consisted of the following at September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Derivative Asset $ 12,606 $ 18,709 Deferred Financing Costs 630 1,197 Prepaid Expenses 11,989 10,481 Investment in Statutory Trusts 1,548 1,548 Investment in Non-Hotel Property and Inventories 1,859 2,026 Deposits with Unaffiliated Third Parties 362 597 Deferred Tax Asset, Net of Valuation Allowance of $13,903 and $14,414, respectively — — Swap Interest Receivable 1,176 932 Other 3,130 3,062 $ 33,300 $ 38,552 Derivative Asset - This category represents the Company’s gross asset fair value of interest rate swaps and interest rate caps. Any swaps and caps resulting in a liability to the Company are accounted for separately within Other Liabilities on the Balance Sheet. Deferred Financing Costs – This category represents financing costs paid by the Company to establish our Line of Credit. These costs have been capitalized and will amortize to interest expense over the term of the Line of Credit. Prepaid Expenses – Prepaid expenses include amounts paid for property tax, insurance and other expenditures that will be expensed in the next twelve months. Investment in Statutory Trusts – We have an investment in the common stock of Hersha Statutory Trust I and Hersha Statutory Trust II. Investment in Non-Hotel Property and Inventories – This category represents the costs paid and capitalized by the Company for items such as office leasehold improvements, furniture and equipment, and property inventories. Deposits with Unaffiliated Third Parties – These deposits represent deposits made by the Company with unaffiliated third parties for items such as lease security deposits, utility deposits, and deposits with unaffiliated third party management companies. Deferred Tax Asset – We have $0 of net deferred tax assets as of September 30, 2023. We have considered various factors, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies in determining a valuation allowance for our deferred tax assets, and at the current time, we believe that it is more likely than not that we will not be able to realize the net deferred tax assets in the future, and a valuation allowance for the entire deferred tax asset has been recorded. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Mortgages Mortgages payable at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Mortgage Indebtedness $ 184,952 $ 208,880 Net Unamortized Premium 2 7 Net Unamortized Deferred Financing Costs (224) (533) Mortgages Payable $ 184,730 $ 208,354 On May 1, 2023, we repaid in full the outstanding mortgage debt of $23,000 secured by the St. Gregory hotel, D.C., and incurred debt extinguishment expense of $52. On June 7, 2023 we refinanced the outstanding mortgage debt with an original principal balance of $56,000 secured by the Hyatt Union Square, New York, NY, which extended the maturity date to June 7, 2024. Contemporaneous with the mortgage refinance, we entered into an interest rate swap that matures June 7, 2024 that fixes the interest rate at 7.39% until maturity. Net Unamortized Deferred Financing Costs associated with entering into mortgage indebtedness are deferred and amortized over the life of the mortgages. Net Unamortized Premiums are also amortized over the remaining life of the loans. Mortgage indebtedness balances are subject to fixed and variable interest rates, which ranged from 4.02% to 8.09% as of September 30, 2023. Our mortgage indebtedness contains various financial and non-financial covenants customarily found in secured, non-recourse financing arrangements. Our mortgage loans payable typically require that specified debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, the lender may be able to escrow cash flow generated by the property securing the applicable mortgage loan, or require an additional principal payment to achieve the desired threshold. We have determined that all debt covenants contained in the loan agreements securing our consolidated hotel properties were met as of September 30, 2023 . As of September 30, 2023, the maturity dates for the outstanding mortgage loans ranged from December 2023 to July 2024. For mortgages with maturity dates within the next twelve months, we plan to refinance each mortgage before their maturities, or use available cash on hand or capacity under our revolving line of credit to pay the obligation. Credit Facilities On August 4, 2022, we entered into a credit agreement (the "Credit Agreement"), which provided for a secured term loan of $400,000 and secured revolving line of credit with capacity of $100,000, both of which mature on August 4, 2024. Borrowings under the Credit Agreement bear interest at a rate of Term Secured Overnight Financing Rate ("SOFR") plus a 250 basis point spread. The following table summarizes the secured term loan balances outstanding as of September 30, 2023 and December 31, 2022: Outstanding Balance September 30, 2023 December 31, 2022 Principal $ 347,853 $ 372,853 Deferred Loan Costs (1,167) (2,217) Total Secured Term Loan $ 346,686 $ 370,636 Immediately upon entering into the Credit Agreement, proceeds from the $400,000 new term loan, along with a portion of the proceeds from the dispositions discussed in Note 3 – Investment in Hotel Properties, were used to pay off and terminate all borrowings under our previous credit facility agreement ("the Prior Facilities"), which consisted of three secured credit arrangements which had an aggregate principal balance of $497,481. The Credit Agreement contains financial covenants, including a fixed charge coverage ratio of not less than 1.50 to 1.00; and a maximum leverage ratio of not more than 60%. We have determined that we are in compliance with all covenants contained in the Credit Agreement as of September 30, 2023. The amount that we can borrow at any given time under the Credit Agreement is governed by certain operating metrics of designated hotel properties known as borrowing base assets. As of September 30, 2023, the following hotel properties secure the Credit Agreement: - The Envoy Boston Seaport, Boston, MA - Ritz-Carlton Georgetown, Washington, DC - The Boxer, Boston, MA - The Winter Haven Hotel Miami Beach, Miami, FL - Hampton Inn Seaport, Seaport, New York, NY - The Blue Moon Hotel Miami Beach, Miami, FL - Holiday Inn Express Chelsea, 29th Street, New York, NY - Cadillac Hotel & Beach Club, Miami, FL - NU Hotel, Brooklyn, New York, NY - The Parrot Key Hotel & Villas, Key West, FL - Hyatt House White Plains, White Plains, NY - The Ambrose Hotel, Santa Monica, CA - The Rittenhouse, Philadelphia, PA - Mystic Marriott Hotel & Spa, Groton, CT - Philadelphia Westin, Philadelphia, PA - Hilton Garden Inn JFK Airport, New York, NY The weighted average interest rate on our credit facilities, including our Prior Facilities and including the effect of derivative instruments, was 4.42% and 3.90%, 4.46% and 3.47% for the three and nine months ended September 30, 2023 and 2022, respectively. Notes Payable Notes payable at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Statutory Trust I and Statutory Trust II Notes Payable Indebtedness $ 51,548 $ 51,548 Net Unamortized Deferred Financing Costs (613) (653) Statutory Trust I and Statutory Trust II Notes Payable $ 50,935 $ 50,895 We have two junior subordinated notes payable in the aggregate amount of $51,548 related to the Hersha Statutory Trusts pursuant to indenture agreements which will mature on July 30, 2035, but may be redeemed at our option, in whole or in part, prior to maturity in accordance with the provisions of the indenture agreements. The $25,774 of notes issued to each of Hersha Statutory Trust I and Hersha Statutory Trust II bear interest at a variable rate of LIBOR plus 3.00% per annum, or SOFR plus 3% plus the spread adjustment of 0.26% after June 30, 2023 . This rate resets 2 business days prior to each quarterly payment. The related deferred financing costs are amortized over the life of the notes payable. The weighted average interest rate on our two junior subordinated notes payable was 8.52% and 5.25%, and 8.14% and 4.16% for the three and nine months ended September 30, 2023 and 2022, respectively. Interest Expense The table below summarizes interest expense incurred by the Company during the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Mortgage Loans Payable $ 3,683 $ 3,503 $ 11,192 $ 8,980 Interest Rate Swap Contracts on Mortgages (480) (184) (1,850) 739 Unsecured Notes Payable 1,123 2,222 3,192 11,217 Credit Facility and Term Loans 6,973 5,455 20,520 13,611 Interest Rate Swap Contracts on Credit Facilities (3,044) (675) (8,388) 1,378 Deferred Financing Costs Amortization 652 896 2,012 3,322 Other 93 116 276 353 Total Interest Expense $ 9,000 $ 11,333 $ 26,954 $ 39,600 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES As of September 30, 2023, we own two hotels, the Hilton Garden Inn JFK and the Annapolis Waterfront Hotel, within our consolidated portfolio of hotels where we do not own the land on which the hotels reside, rather we lease the land from an unrelated third-party lessor. Our land leases are classified as operating leases and have initial terms with extension options that range from August 2064 to October 2103. We also have two additional office space leases for our Philadelphia office and New York City office. The Philadelphia office lease c ommenced in April 2023 with a lease term through July 2028. Our New York City office lease term is through D ecember 2027. Lease costs for our office spaces are included in General and Administrative expense. We disposed of the following hotels during the year ended December 31, 2022 which had ground leases that were assumed by the buyers: the Courtyard Brookline, the Gate hotel JFK Airport, Hotel Milo, and Towneplace Suites Sunnyvale. The components of lease costs for the three months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 302 $ 51 $ 353 $ 943 $ 121 $ 1,064 Variable lease costs 284 45 329 242 47 289 Total lease costs $ 586 $ 96 $ 682 $ 1,185 $ 168 $ 1,353 The components of lease costs for the nine months ended September 30, 2023 and 2022 were as follows: Nine months ended September 30, 2023 Nine months ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 909 $ 306 $ 1,215 $ 3,045 $ 363 $ 3,408 Variable lease costs 606 172 778 761 203 964 Total lease costs $ 1,515 $ 478 $ 1,993 $ 3,806 $ 566 $ 4,372 Other information related to leases as of and for the nine months ended September 30, 2023 and 2022 is as follows: September 30, 2023 September 30, 2022 Cash paid from operating cash flow for operating leases $ 2,048 $ 4,080 Weighted average remaining lease term (in years) 48.7 66.4 Weighted average discount rate 7.84 % 7.87 % |
LEASES | LEASES As of September 30, 2023, we own two hotels, the Hilton Garden Inn JFK and the Annapolis Waterfront Hotel, within our consolidated portfolio of hotels where we do not own the land on which the hotels reside, rather we lease the land from an unrelated third-party lessor. Our land leases are classified as operating leases and have initial terms with extension options that range from August 2064 to October 2103. We also have two additional office space leases for our Philadelphia office and New York City office. The Philadelphia office lease c ommenced in April 2023 with a lease term through July 2028. Our New York City office lease term is through D ecember 2027. Lease costs for our office spaces are included in General and Administrative expense. We disposed of the following hotels during the year ended December 31, 2022 which had ground leases that were assumed by the buyers: the Courtyard Brookline, the Gate hotel JFK Airport, Hotel Milo, and Towneplace Suites Sunnyvale. The components of lease costs for the three months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 302 $ 51 $ 353 $ 943 $ 121 $ 1,064 Variable lease costs 284 45 329 242 47 289 Total lease costs $ 586 $ 96 $ 682 $ 1,185 $ 168 $ 1,353 The components of lease costs for the nine months ended September 30, 2023 and 2022 were as follows: Nine months ended September 30, 2023 Nine months ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 909 $ 306 $ 1,215 $ 3,045 $ 363 $ 3,408 Variable lease costs 606 172 778 761 203 964 Total lease costs $ 1,515 $ 478 $ 1,993 $ 3,806 $ 566 $ 4,372 Other information related to leases as of and for the nine months ended September 30, 2023 and 2022 is as follows: September 30, 2023 September 30, 2022 Cash paid from operating cash flow for operating leases $ 2,048 $ 4,080 Weighted average remaining lease term (in years) 48.7 66.4 Weighted average discount rate 7.84 % 7.87 % |
COMMITMENTS AND CONTINGENCIES A
COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS | COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS Management Agreements Our wholly-owned TRS, 44 New England Management Company, and certain of our joint venture entities engage eligible independent contractors in accordance with the requirements for qualification as a REIT under the Internal Revenue Code of 1986, as amended, including Hersha Hospitality Management Limited Partnership (“HHMLP”), as the property managers for hotels it leases from us pursuant to management agreements. Certain executives and trustees of the Company own a minority interest in HHMLP. Our management agreements with HHMLP provide for a term of five years and are subject to early termination upon the occurrence of defaults and certain other events described therein. As required under the REIT qualification rules, HHMLP must qualify as an “eligible independent contractor” during the term of the management agreements. Under the management agreements, HHMLP generally pays the operating expenses of our hotels. All operating expenses or other expenses incurred by HHMLP in performing its authorized duties are reimbursed or borne by our TRS to the extent the operating expenses or other expenses are incurred within the limits of the applicable approved hotel operating budget. HHMLP is not obligated to advance any of its own funds for operating expenses of a hotel or to incur any liability in connection with operating a hotel. Management agreements with other unaffiliated hotel management companies have similar terms. For its services, HHMLP receives a base management fee and, if a hotel exceeds certain thresholds, an incentive management fee. The base management fee for a hotel is due monthly and is equal to 3% of gross revenues associated with each hotel managed for the related month. The incentive management fee, if any, for a hotel is due annually in arrears on the ninetieth day following the end of each fiscal year and is based upon the financial performance of the hotels. For the three and nine months ended September 30, 2023 and 2022, base management fees incurred to HHMLP totaled $2,531 and $2,675, and $6,411 and $7,818 respectively, and are recorded as Hotel Operating Expenses. Franchise Agreements Our branded hotel properties that are not managed by the brand are operated under franchise agreements assumed by the hotel property lessee. The franchise agreements have 10 to 20 year terms, but may be terminated by either the franchisee or franchisor on certain anniversary dates specified in the agreements. The franchise agreements require annual payments for franchise royalties, reservation, advertising services and certain other charges, and such payments are primarily based upon percentages of gross room revenue. These payments are paid by the hotels and charged to expense as incurred. Franchise fee expenses for the three and nine months ended September 30, 2023 and 2022 were $3,829 and $4,181, and $10,312 and $12,595 respectively, and are recorded in Hotel Operating Expenses. The initial fees incurred to enter into the franchise agreements are amortized over the life of the franchise agreements. Accounting, Revenue Management and Information Technology Fees Each of the wholly-owned hotels and consolidated joint venture hotel properties managed by HHMLP incurs a monthly accounting and information technology fee. Monthly fees for accounting services are between $2 and $3 per property and monthly information technology fees range from $1 to $2 per property. Revenue management service fees are incurred to reimburse HHMLP for costs related to corporate level direct sales and sales support, and are allocated based on total hotel revenue. For the three and nine months ended September 30, 2023 and 2022, the Company incurred the following fees which are included in Hotel Operating Expenses under Other Operating Expenses: For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Accounting fees $ 204 $ 244 $ 613 $ 799 Information technology fees 70 80 206 257 Revenue management service fees 449 515 1,347 1,664 Capital Expenditure Fees HHMLP charges fees between 3% and 5% on certain capital expenditures and pending renovation projects at the properties as compensation for procurement services related to capital expenditures and for project management of renovation projects. For the three and nine months ended September 30, 2023 and 2022, we incurred fees of $149 and $126, and $804 and $420, respectively, which were capitalized with the cost of capital expenditures. Acquisitions from Affiliates We have entered into an option agreement with certain of our officers and trustees such that we obtain a right of first refusal to purchase any hotel owned or developed in the future by these individuals or entities controlled by them at fair market value. This right of first refusal would apply to each party until one year after such party ceases to be an officer or trustee of the Company. Our Acquisition Committee of the Board of Trustees is comprised solely of independent trustees, and the purchase prices and all material terms of the purchase of hotels from related parties are approved by the Acquisition Committee. Hotel Supplies We purchase certain hotel supplies and make certain capital expenditures from Hersha Purchasing and Design (HPD), a hotel supply company owned, in part, by certain executives and trustees of the Company. For the three and nine months ended September 30, 2023 and 2022, we incurred charges for hotel supplies of $12 and $0, and $12 and $0, respectively, for hotel supplies purchased from HPD. For the three and nine months ended September 30, 2023 and 2022, we incurred charges of $4,847 and $1,150, and $15,559 and $5,691, respectively, for capital expenditure purchases from HPD. Hotel supplies are expensed and included in Hotel Operating Expenses on our consolidated statements of operations, and capital expenditure purchases are included in investment in hotel properties on our consolidated balance sheets. Corporate Shared Services The Company utilizes the services of HHMLP to provide risk management, information technology, and human resource services to the Company. The fees incurred for these services for the three and nine months ended September 30, 2023 and 2022 were $124 and $146, and $371 and $439, respectively, and are included in General and Administrative Expense on our consolidated statements of operations. Restaurant Lease Agreements with Independent Restaurant Group The Company has entered into management agreements with Independent Restaurant Group (“IRG”), owned, in part, by certain executives and trustees of the Company. As of September 30, 2023, IRG is subject to the supervision of HHMLP, as property manager, for the restaurant at one of our hotel properties. The IRG lease for a restaurant at the Rittenhouse hotel was terminated as of August 1, 2023. For the three and nine months ended September 30, 2023 and 2022, management fees incurred which were paid to IRG totaled $39 and $61, and $143 and $172, respectively. Due From Related Parties The due from related parties balance as of September 30, 2023 and December 31, 2022 was approximately $232 and $245, respectively. The balances primarily consist of asset management fees due from our unconsolidated joint ventures. Due to Related Parties |
FAIR VALUE MEASUREMENTS AND DER
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS | FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS Fair Value Measurements Our determination of fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, we utilize a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As of September 30, 2023, the Company’s derivative instruments represented the only financial instruments measured at fair value. Currently, the Company uses derivative instruments, such as interest rate swaps and caps, to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counter-party’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and the counter-parties. However, as of September 30, 2023 we have assessed the significance of the effect of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Derivative Instruments The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. Interest rate caps designated as cash flow hedges limit the Company’s exposure to increased cash payments due to increases in variable interest rates. The following table presents our derivative instruments as of September 30, 2023 and December 31, 2022: Estimated Fair Value Asset Balance Hedged Debt Type Strike Rate Index Effective Date Derivative Contract Maturity Date Notional Amount September 30, 2023 December 31, 2022 Term Loan Instruments: Credit Facility Swap 1.341 % 1-Month SOFR + 2.50% August 30, 2022 September 10, 2024 $ 270,000 $ 9,988 $ 14,123 Credit Facility Swap 1.279 % 1-Month SOFR + 2.50% September 6, 2022 August 4, 2024 30,000 1,017 1,533 Mortgages: Hyatt, Union Square, New York, NY Swap 1.870 % 1-Month LIBOR + 2.30% June 7, 2019 June 7, 2023 56,000 — 699 Hilton Garden Inn Tribeca, New York, NY Swap 1.768 % 1-Month LIBOR + 2.25% July 25, 2019 July 25, 2024 22,725 678 1,007 Hilton Garden Inn Tribeca, New York, NY Swap 1.768 % 1-Month LIBOR + 2.25% July 25, 2019 July 25, 2024 22,725 678 1,007 Hilton Garden Inn 52nd Street, New York, NY Cap 4.000 % 1-Month SOFR December 4, 2022 December 1, 2023 44,325 100 340 Hyatt, Union Square, New York, NY Swap 4.988 % 1-Month SOFR + 2.40% June 7, 2023 June 7, 2024 56,000 145 — $ 12,606 $ 18,709 The fair value of the interest rate swaps and cap are included in Other Assets at September 30, 2023 and December 31, 2022. The net change related to derivative instruments designated as cash flow hedges recognized as unrealized gains reflected on our consolidated balance sheet in accumulated other comprehensive income was a (loss)/gain of $(2,701) and $5,799, and $(6,005) and $25,902 for the three and nine months ended September 30, 2023 and 2022, respectively. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made and received on the Company’s variable-rate derivatives. The change in net unrealized gains/(losses) on cash flow hedges reflects a reclassification of $46 and $(136), and $98 and $(875) of net unrealized gains/(losses) from accumulated other comprehensive income as an increase/decrease to interest expense for the three and nine months ended September 30, 2023 and 2022, respectively. For the next twelve months ending September 30, 2024, we estimate that an additional $12,847 will be reclassified as a decrease to interest expense. Fair Value of Debt We estimate the fair value of our fixed rate debt and the credit spreads over variable market rates on our variable rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of the debt obligation with similar credit policies. Credit spreads take into consideration general market conditions and maturity. The inputs utilized in estimating the fair value of debt are classified in Level 2 of the fair value hierarchy. As of September 30, 2023, the carrying value and estimated fair value of our debt was $582,351 and $566,640, respectively. As of December 31, 2022, the carrying value and estimated fair value of our debt was $629,885 and $610,401, respectively. |
SHARE BASED PAYMENTS
SHARE BASED PAYMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE BASED PAYMENTS | SHARE BASED PAYMENTS On May 25, 2023, our shareholders approved an amendment to the Hersha Hospitality Trust 2012 Equity Incentive Plan which provides equity-based incentives for the purpose of attracting and retaining executive officers, employees, trustees and other persons and entities that provide services to the Company. On March 9, 2023, the Compensation Committee approved the 2023 Long Term Incentive Plan ("2023 LTIP") in which 60% of the LTIP Units are issuable based on the Company's achievement of a certain level of (1) absolute total shareholder return (37.5% of the award), (2) relative total shareholder return as compared to the Company’s peer group (37.5% of the award), and (3) relative growth in revenue per available room ("RevPar") compared to the Company’s peer group (25.0% of the award) and the remaining 40% of the LTIP Units awarded provide for time based vesting. The 60% market-based portion of the 2023 LTIP has a three-year performance period which commenced on January 1, 2023 and ends December 31, 2025. As of September 30, 2023, no shares or LTIP Units have been issued to the executive officers in settlement of 2023 LTIP market-based awards. A summary of our share based compensation activity from December 31, 2022 to September 30, 2023 is as follows: LTIP Unit Awards Restricted Share Awards Share Awards Number of Units Weighted Average Grant Date Fair Value Number of Restricted Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested Balance as of December 31, 2022 1,105,573 $ 9.65 164,166 $ 9.83 — Granted 1,297,419 (1) 5.90 52,710 5.90 145,615 $ 6.36 Vested (51,452) 5.90 (122,423) 10.03 (145,615) 6.36 Forfeited — N/A (2,767) 10.52 — N/A Unvested Balance as of September 30, 2023 2,351,540 $ 7.66 91,686 $ 7.29 — (1) On March 22, 2023, 1,104,874 Units were issued to the executive officers in settlement of the 2022 Short Term Incentive Program. These Units vest on December 31, 2024, the two year anniversary following the end of the performance period and were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company's common shares on the NYSE for the 20 trading days prior to December 31, 2022. On June 21, 2023, the Compensation Committee awarded 192,545 LTIP Units related to the time based portion of the 2023 LTIP. These LTIP Units vest over a three year period from January 1, 2023 to December 31, 2025. The LTIP Units awarded were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company’s common shares on the NYSE for the 20 trading days prior to December 31, 2022. The following table summarizes share based compensation expense for the three and nine months ended September 30, 2023 and 2022 and unearned compensation as of September 30, 2023 and December 31, 2022: Share Based Unearned For the Three Months Ended For the Nine Months Ended As of September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 September 30, 2023 December 31, 2022 Issued Awards LTIP Unit Awards $ 1,857 $ 1,960 $ 4,584 $ 5,878 $ 5,689 $ 5,311 Restricted Share Awards 98 228 473 767 358 683 Share Awards 45 152 1,060 916 — — Unissued Awards Market Based 339 428 971 1,047 2,632 2,541 Total $ 2,339 $ 2,768 $ 7,088 $ 8,608 $ 8,679 $ 8,535 The weighted-average period of which the unrecognized compensation expense will be recorded is approximately 1.6 years for LTIP Unit Awards and 1.1 years for Restricted Share Awards. The remaining unvested target units are expected to vest as follows: 2023 2024 2025 2026 LTIP Unit Awards 1,110,621 1,176,738 64,181 — Restricted Share Awards — 73,758 10,464 7,464 1,110,621 1,250,496 74,645 7,464 As noted in Note 1 - Company Overview and Merger Agreement, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Company Merger Effective Time, each Company Restricted Share Award that is outstanding immediately prior to the Company Merger Effective Time will vest, and each Company Restricted Share Award will be canceled and converted into the right to receive a payment (without interest and subject to applicable tax withholding) equal to the number of Company Common Shares underlying such Company Restricted Share Award at $10.00 per share. At the Partnership Merger Effective Time, each Company LTIP Unit that is outstanding and unvested as of immediately prior to the Partnership Merger Effective Time shall vest and become transferable and immediately thereafter, the Company shall cause a Forced Conversion (as defined in the Merger Agreement) with respect to all Company LTIP Units then eligible for conversion (after giving effect to the vesting of all Company LTIP Units as described in the Merger Agreement) such that, as of the Partnership Merger Effective Time, each then outstanding Company LTIP Unit will be converted into an equal number of common Company Partnership Units (with such converted Company Partnership Units treated in the same manner under the Merger Agreement as other outstanding Company Partnership Units). |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table is a reconciliation of the income or loss (numerator) and the weighted average shares (denominator) used in the calculation of basic and diluted earnings per common share. The computation of basic and diluted earnings per share is presented below. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 NUMERATOR: Basic and Diluted* Net income (loss) $ 952 $ 136,189 $ (2,588) $ 129,174 Loss (Income) Allocated to Noncontrolling Interests 629 (14,668) 3,038 (15,374) Distributions to Preferred Shareholders (6,043) (6,044) (18,130) (18,131) Dividends Paid on Unvested Restricted Shares and LTIP Units (122) (101) (361) (101) Net (loss) income applicable to Common Shareholders $ (4,584) $ 115,376 $ (18,041) $ 95,568 DENOMINATOR: Weighted average number of common shares - basic 40,012,965 39,465,645 39,831,101 39,325,679 Effect of dilutive securities: Restricted Stock Awards and LTIP Units (unvested) — 1,095,727 — 979,938 Contingently Issued Shares and Units — 401,401 — 364,489 Weighted average number of common shares - diluted 40,012,965 40,962,773 39,831,101 40,670,106 * Loss (Income) allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units and Vested LTIP Units have been omitted from the denominator for the purpose of computing diluted earnings per share since including these amounts in the numerator and denominator would have no impact. In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to net (loss) income applicable to common shareholders. |
CASH FLOW DISCLOSURES AND NON C
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES | CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES Interest paid during the nine months ended September 30, 2023 and 2022 totaled $34,886 and $31,087, respectively. Net cash received on Interest Rate Derivative contracts during the nine months ended September 30, 2023 totaled $10,093 and net cash paid on Interest Rate Derivative contracts during the nine months ended September 30, 2022 totaled $4,347. Cash paid for income taxes during the nine months ended September 30, 2023 and 2022 totaled $4,762 and $1,246, respectively. The following non-cash investing and financing activities occurred during the nine months ended September 30, 2023 and 2022: 2023 2022 Issuance of share based payments $ 9,181 $ 5,462 Accrued payables for capital expenditures placed into service 666 1,222 Adjustment to Record Noncontrolling Interest at Redemption Value (416) 2,349 Adjustment to Record Right of Use Asset & Lease Liability 917 — The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022: 2023 2022 Cash and cash equivalents $ 146,145 $ 94,271 Escrowed cash 4,948 13,129 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 151,093 $ 107,400 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Presentation | Principles of Consolidation and Presentation The accompanying consolidated financial statements have been prepared in accordance with US GAAP and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned Taxable REIT Subsidiary Lessee (“TRS Lessee”), 44 New England Management Company. All significant inter-company amounts have been eliminated. |
Variable Interest Entities | Variable Interest Entities We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. Based on our examination, there have been no changes to the operating structure of our legal entities during the three and nine months ended September 30, 2023 and, therefore, there are no changes to our evaluation of VIE's as presented within our annual report presented on Form 10-K for the year ended December 31, 2022. |
Noncontrolling Interest | Noncontrolling InterestWe classify the noncontrolling interests of our common units of limited partnership interest in HHLP (“Common Units”), and Long Term Incentive Plan Units (“LTIP Units”) as equity. LTIP Units are a separate class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances. |
Investment in Hotel Properties | Investment in Hotel Properties Investments in hotel properties are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life of up to 40 years for buildings and improvements, and two These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in hotel properties we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis. Identifiable assets, liabilities, and noncontrolling interests related to hotel properties acquired are recorded at fair value. Estimating techniques and assumptions used in determining fair values involve significant estimates and judgments. These estimates and judgments have a direct impact on the carrying value of our assets and liabilities which can directly impact the amount of depreciation expense recorded on an annual basis and could have an impact on our assessment of potential impairment of our investment in hotel properties. We consider a hotel to be held for sale when management and our independent trustees commit to a plan to sell the property, the property is available for sale, management engages in an active program to locate a buyer for the property and it is probable the sale will be completed within a year of the initiation of the plan to sell. We evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. We generally include the operations of a hotel that was sold or a hotel that has been classified as held for sale in continuing operations unless the sale represents a strategic shift that will have a major impact on our future operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition. NOTE 2 - BASIS OF PRESENTATION (CONTINUED) Based on the occurrence of certain events or changes in circumstances, we review the recoverability of the property’s carrying value. Such events or changes in circumstances include the following: • a significant decrease in the market price of a long-lived asset; • a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; • a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator; • an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; • a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and • a current expectation that, it is more likely than not that, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. We review our portfolio on an ongoing basis to evaluate the existence of any of the aforementioned events or changes in circumstances that would require us to test for recoverability. In general, our review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value expected, as well as the effects of hotel demand, competition and other factors. Other assumptions used in the review of recoverability include the holding period and expected terminal capitalization rate. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in hotel properties. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Preferred Stock | Terms of the Series C, Series D, and Series E Preferred Shares outstanding at September 30, 2023 and December 31, 2022 are summarized as follows: Dividend Per Share Shares Outstanding Nine Months Ended September 30, Series September 30, 2023 December 31, 2022 Aggregate Liquidation Preference Distribution Rate 2023 2022 Series C 3,000,000 3,000,000 $ 75,000 6.875 % $ 1.2891 $ 1.2891 Series D 7,701,700 7,701,700 $ 192,500 6.500 % $ 1.2188 $ 1.2188 Series E 4,001,514 4,001,514 $ 100,000 6.500 % $ 1.2188 $ 1.2188 Total 14,703,214 14,703,214 |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Investment in Hotel Properties | Investment in hotel properties consists of the following at September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Land $ 390,532 $ 390,532 Buildings and Improvements 1,107,687 1,093,575 Furniture, Fixtures and Equipment 216,477 203,369 Construction in Progress 8,309 7,105 1,723,005 1,694,581 Less Accumulated Depreciation (546,561) (505,342) Total Investment in Hotel Properties * $ 1,176,444 $ 1,189,239 * The net book value of investment in hotel property at Ritz Coconut Grove, which is a variable interest entity, is $36,176 and $37,303 at September 30, 2023 and December 31, 2022, respectively. |
Schedule of Real Estate Assets Sold | During the year ended December 31, 2022 , we had the following hotel dispositions: Hotel Acquisition Disposition Consideration Gain on Urban Select Service (7 hotels) June 2005 - October 2016 8/4/2022, 10/26/22 $ 505,000 $ 170,193 Hotel Milo Santa Barbara 02/28/2014 10/06/2022 55,000 25,784 Pan Pacific Seattle 02/21/2017 10/19/2022 70,000 1,532 Gate hotel JFK Airport 06/13/2008 11/02/2022 11,000 — 2022 Total $ 197,509 |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Investment in Unconsolidated Joint Ventures | As of September 30, 2023 and December 31, 2022, our investment in unconsolidated joint ventures consisted of the following: Joint Venture Hotel Properties Percent Owned September 30, 2023 December 31, 2022 SB Partners, LLC Holiday Inn Express, South Boston, MA 50 % * $ — $ — SB Partners Three, LLC Home2 Suites, South Boston, MA 50 % 4,068 4,989 $ 4,068 $ 4,989 |
Schedule of Income (Loss) from Unconsolidated Joint Ventures | Income (Loss) recognized during the three and nine months ended September 30, 2023 and 2022 for our investments in unconsolidated joint ventures is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Hiren Boston, LLC* $ — $ 394 $ — $ 436 SB Partners, LLC — — — (310) SB Partners Three, LLC 5 84 (421) (227) Income (Loss) from Unconsolidated Joint Venture Investments $ 5 $ 478 $ (421) $ (101) |
Schedule of Financial Information Related to Unconsolidated Joint Ventures | The following tables set forth the total assets, liabilities, equity and components of net income or loss, including the Company’s share, related to the unconsolidated joint ventures discussed above as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022. Balance Sheets September 30, 2023 December 31, 2022 Assets Investment in Hotel Properties, Net $ 44,247 $ 47,356 Other Assets 12,131 11,803 Total Assets $ 56,378 $ 59,159 Liabilities and Equity Mortgages $ 49,304 $ 50,236 Other Liabilities 10,196 10,012 Equity: Hersha Hospitality Trust 1,613 2,630 Joint Venture Partner(s) (4,735) (3,719) Total Equity (3,122) (1,089) Total Liabilities and Equity $ 56,378 $ 59,159 Statements of Operations Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Room Revenue $ 5,668 $ 8,166 $ 13,003 $ 17,661 Other Revenue 208 405 531 909 Operating Expenses (2,854) (4,156) (7,182) (10,239) Lease Expense (159) (320) (478) (834) Property Taxes and Insurance (417) (588) (1,170) (1,732) General and Administrative 7 (71) 78 (107) Depreciation and Amortization (1,041) (1,244) (3,184) (3,746) Interest Expense (851) (923) (2,490) (2,364) Income Tax Expense (140) (114) (140) (62) Net Income (Loss) $ 421 $ 1,155 $ (1,032) $ (514) |
Schedule of Reconciliation of Share in Unconsolidated Joint Ventures Equity in Investment in Unconsolidated Joint Ventures | The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of September 30, 2023 and December 31, 2022. September 30, 2023 December 31, 2022 Our share of equity recorded on the joint ventures' financial statements $ 1,613 $ 2,630 Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures (1) 2,455 2,359 Investment in Unconsolidated Joint Ventures $ 4,068 $ 4,989 (1) Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements. |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Other Assets consisted of the following at September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Derivative Asset $ 12,606 $ 18,709 Deferred Financing Costs 630 1,197 Prepaid Expenses 11,989 10,481 Investment in Statutory Trusts 1,548 1,548 Investment in Non-Hotel Property and Inventories 1,859 2,026 Deposits with Unaffiliated Third Parties 362 597 Deferred Tax Asset, Net of Valuation Allowance of $13,903 and $14,414, respectively — — Swap Interest Receivable 1,176 932 Other 3,130 3,062 $ 33,300 $ 38,552 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgages Payable and Interest Expense | Mortgages payable at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Mortgage Indebtedness $ 184,952 $ 208,880 Net Unamortized Premium 2 7 Net Unamortized Deferred Financing Costs (224) (533) Mortgages Payable $ 184,730 $ 208,354 Notes payable at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Statutory Trust I and Statutory Trust II Notes Payable Indebtedness $ 51,548 $ 51,548 Net Unamortized Deferred Financing Costs (613) (653) Statutory Trust I and Statutory Trust II Notes Payable $ 50,935 $ 50,895 The table below summarizes interest expense incurred by the Company during the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Mortgage Loans Payable $ 3,683 $ 3,503 $ 11,192 $ 8,980 Interest Rate Swap Contracts on Mortgages (480) (184) (1,850) 739 Unsecured Notes Payable 1,123 2,222 3,192 11,217 Credit Facility and Term Loans 6,973 5,455 20,520 13,611 Interest Rate Swap Contracts on Credit Facilities (3,044) (675) (8,388) 1,378 Deferred Financing Costs Amortization 652 896 2,012 3,322 Other 93 116 276 353 Total Interest Expense $ 9,000 $ 11,333 $ 26,954 $ 39,600 |
Schedule of Line of Credit Facilities | The following table summarizes the secured term loan balances outstanding as of September 30, 2023 and December 31, 2022: Outstanding Balance September 30, 2023 December 31, 2022 Principal $ 347,853 $ 372,853 Deferred Loan Costs (1,167) (2,217) Total Secured Term Loan $ 346,686 $ 370,636 |
Schedule of Borrowing Base Assets | As of September 30, 2023, the following hotel properties secure the Credit Agreement: - The Envoy Boston Seaport, Boston, MA - Ritz-Carlton Georgetown, Washington, DC - The Boxer, Boston, MA - The Winter Haven Hotel Miami Beach, Miami, FL - Hampton Inn Seaport, Seaport, New York, NY - The Blue Moon Hotel Miami Beach, Miami, FL - Holiday Inn Express Chelsea, 29th Street, New York, NY - Cadillac Hotel & Beach Club, Miami, FL - NU Hotel, Brooklyn, New York, NY - The Parrot Key Hotel & Villas, Key West, FL - Hyatt House White Plains, White Plains, NY - The Ambrose Hotel, Santa Monica, CA - The Rittenhouse, Philadelphia, PA - Mystic Marriott Hotel & Spa, Groton, CT - Philadelphia Westin, Philadelphia, PA - Hilton Garden Inn JFK Airport, New York, NY |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Components of Lease Costs | The components of lease costs for the three months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 302 $ 51 $ 353 $ 943 $ 121 $ 1,064 Variable lease costs 284 45 329 242 47 289 Total lease costs $ 586 $ 96 $ 682 $ 1,185 $ 168 $ 1,353 The components of lease costs for the nine months ended September 30, 2023 and 2022 were as follows: Nine months ended September 30, 2023 Nine months ended September 30, 2022 Ground Lease Office Lease Total Ground Lease Office Lease Total Operating lease costs $ 909 $ 306 $ 1,215 $ 3,045 $ 363 $ 3,408 Variable lease costs 606 172 778 761 203 964 Total lease costs $ 1,515 $ 478 $ 1,993 $ 3,806 $ 566 $ 4,372 Other information related to leases as of and for the nine months ended September 30, 2023 and 2022 is as follows: September 30, 2023 September 30, 2022 Cash paid from operating cash flow for operating leases $ 2,048 $ 4,080 Weighted average remaining lease term (in years) 48.7 66.4 Weighted average discount rate 7.84 % 7.87 % |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Expense | For the three and nine months ended September 30, 2023 and 2022, the Company incurred the following fees which are included in Hotel Operating Expenses under Other Operating Expenses: For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Accounting fees $ 204 $ 244 $ 613 $ 799 Information technology fees 70 80 206 257 Revenue management service fees 449 515 1,347 1,664 |
FAIR VALUE MEASUREMENTS AND D_2
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Interest Rate Swaps and Caps | The following table presents our derivative instruments as of September 30, 2023 and December 31, 2022: Estimated Fair Value Asset Balance Hedged Debt Type Strike Rate Index Effective Date Derivative Contract Maturity Date Notional Amount September 30, 2023 December 31, 2022 Term Loan Instruments: Credit Facility Swap 1.341 % 1-Month SOFR + 2.50% August 30, 2022 September 10, 2024 $ 270,000 $ 9,988 $ 14,123 Credit Facility Swap 1.279 % 1-Month SOFR + 2.50% September 6, 2022 August 4, 2024 30,000 1,017 1,533 Mortgages: Hyatt, Union Square, New York, NY Swap 1.870 % 1-Month LIBOR + 2.30% June 7, 2019 June 7, 2023 56,000 — 699 Hilton Garden Inn Tribeca, New York, NY Swap 1.768 % 1-Month LIBOR + 2.25% July 25, 2019 July 25, 2024 22,725 678 1,007 Hilton Garden Inn Tribeca, New York, NY Swap 1.768 % 1-Month LIBOR + 2.25% July 25, 2019 July 25, 2024 22,725 678 1,007 Hilton Garden Inn 52nd Street, New York, NY Cap 4.000 % 1-Month SOFR December 4, 2022 December 1, 2023 44,325 100 340 Hyatt, Union Square, New York, NY Swap 4.988 % 1-Month SOFR + 2.40% June 7, 2023 June 7, 2024 56,000 145 — $ 12,606 $ 18,709 |
SHARE BASED PAYMENTS (Tables)
SHARE BASED PAYMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Unvested Share Awards Issued to Executives | A summary of our share based compensation activity from December 31, 2022 to September 30, 2023 is as follows: LTIP Unit Awards Restricted Share Awards Share Awards Number of Units Weighted Average Grant Date Fair Value Number of Restricted Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested Balance as of December 31, 2022 1,105,573 $ 9.65 164,166 $ 9.83 — Granted 1,297,419 (1) 5.90 52,710 5.90 145,615 $ 6.36 Vested (51,452) 5.90 (122,423) 10.03 (145,615) 6.36 Forfeited — N/A (2,767) 10.52 — N/A Unvested Balance as of September 30, 2023 2,351,540 $ 7.66 91,686 $ 7.29 — (1) On March 22, 2023, 1,104,874 Units were issued to the executive officers in settlement of the 2022 Short Term Incentive Program. These Units vest on December 31, 2024, the two year anniversary following the end of the performance period and were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company's common shares on the NYSE for the 20 trading days prior to December 31, 2022. On June 21, 2023, the Compensation Committee awarded 192,545 LTIP Units related to the time based portion of the 2023 LTIP. These LTIP Units vest over a three year period from January 1, 2023 to December 31, 2025. The LTIP Units awarded were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company’s common shares on the NYSE for the 20 trading days prior to December 31, 2022. |
Schedule of Employee Service Share-Based Compensation, Allocation of Recognized Period Costs | The following table summarizes share based compensation expense for the three and nine months ended September 30, 2023 and 2022 and unearned compensation as of September 30, 2023 and December 31, 2022: Share Based Unearned For the Three Months Ended For the Nine Months Ended As of September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 September 30, 2023 December 31, 2022 Issued Awards LTIP Unit Awards $ 1,857 $ 1,960 $ 4,584 $ 5,878 $ 5,689 $ 5,311 Restricted Share Awards 98 228 473 767 358 683 Share Awards 45 152 1,060 916 — — Unissued Awards Market Based 339 428 971 1,047 2,632 2,541 Total $ 2,339 $ 2,768 $ 7,088 $ 8,608 $ 8,679 $ 8,535 |
Schedule of Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award | The remaining unvested target units are expected to vest as follows: 2023 2024 2025 2026 LTIP Unit Awards 1,110,621 1,176,738 64,181 — Restricted Share Awards — 73,758 10,464 7,464 1,110,621 1,250,496 74,645 7,464 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Earnings Per Share | The following table is a reconciliation of the income or loss (numerator) and the weighted average shares (denominator) used in the calculation of basic and diluted earnings per common share. The computation of basic and diluted earnings per share is presented below. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 NUMERATOR: Basic and Diluted* Net income (loss) $ 952 $ 136,189 $ (2,588) $ 129,174 Loss (Income) Allocated to Noncontrolling Interests 629 (14,668) 3,038 (15,374) Distributions to Preferred Shareholders (6,043) (6,044) (18,130) (18,131) Dividends Paid on Unvested Restricted Shares and LTIP Units (122) (101) (361) (101) Net (loss) income applicable to Common Shareholders $ (4,584) $ 115,376 $ (18,041) $ 95,568 DENOMINATOR: Weighted average number of common shares - basic 40,012,965 39,465,645 39,831,101 39,325,679 Effect of dilutive securities: Restricted Stock Awards and LTIP Units (unvested) — 1,095,727 — 979,938 Contingently Issued Shares and Units — 401,401 — 364,489 Weighted average number of common shares - diluted 40,012,965 40,962,773 39,831,101 40,670,106 * Loss (Income) allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units and Vested LTIP Units have been omitted from the denominator for the purpose of computing diluted earnings per share since including these amounts in the numerator and denominator would have no impact. In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to net (loss) income applicable to common shareholders. |
CASH FLOW DISCLOSURES AND NON_2
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow | The following non-cash investing and financing activities occurred during the nine months ended September 30, 2023 and 2022: 2023 2022 Issuance of share based payments $ 9,181 $ 5,462 Accrued payables for capital expenditures placed into service 666 1,222 Adjustment to Record Noncontrolling Interest at Redemption Value (416) 2,349 Adjustment to Record Right of Use Asset & Lease Liability 917 — |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022: 2023 2022 Cash and cash equivalents $ 146,145 $ 94,271 Escrowed cash 4,948 13,129 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 151,093 $ 107,400 |
Schedule of Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022: 2023 2022 Cash and cash equivalents $ 146,145 $ 94,271 Escrowed cash 4,948 13,129 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 151,093 $ 107,400 |
COMPANY OVERVIEW AND MERGER A_2
COMPANY OVERVIEW AND MERGER AGREEMENT (Details) | 9 Months Ended | ||
Aug. 27, 2023 USD ($) $ / shares | Sep. 30, 2023 USD ($) loan $ / shares | Dec. 31, 2022 $ / shares | |
Class of Stock | |||
Preferred shares - par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Termination fee payable | $ | $ 30,000,000 | ||
Secured Debt | |||
Class of Stock | |||
Number of debt instruments (loan) | loan | 5 | ||
Long-term debt, maturity, next twelve months | $ | $ 184,952,000 | ||
Entities Affiliated With The Parent | Capital Contributions | |||
Class of Stock | |||
Other commitment | $ | 400,000,000 | ||
Entities Affiliated With The Parent | Limited Guarantee | |||
Class of Stock | |||
Other commitment | $ | $ 75,000,000 | ||
Parent Parties | |||
Class of Stock | |||
Line of credit facility, maximum borrowing capacity | $ | 1,050,000,000 | ||
Class A Common Shares | |||
Class of Stock | |||
Common shares - par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Series C | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.875% | ||
Series D | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.50% | ||
Series E | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.50% | ||
The Mergers | |||
Class of Stock | |||
Termination fee receivable | $ | $ 67,500,000 | ||
Scenario, Plan | The Mergers | Class A Common Shares | Surviving Partnership | |||
Class of Stock | |||
Common shares - par value (in dollars per share) | $ 0.01 | ||
Share price (in dollars per share) | 10 | ||
Equity shares conversion rate (in dollars per share) | $ 10 | ||
Scenario, Plan | The Mergers | Series C | Surviving Partnership | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.875% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 | ||
Scenario, Plan | The Mergers | Series D | Surviving Partnership | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.50% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 | ||
Scenario, Plan | The Mergers | Series E | Surviving Partnership | |||
Class of Stock | |||
Preferred stock, dividend rate (percent) | 6.50% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 | ||
Hersha Hospitality Limited Partnership | |||
Class of Stock | |||
Various subsidiary limited partnership interest (percent) | 83.30% | ||
Hersha Hospitality, LLC | |||
Class of Stock | |||
General partnership interest (percent) | 1% |
BASIS OF PRESENTATION (Narrativ
BASIS OF PRESENTATION (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Aug. 27, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Class of Stock | |||
Noncontrolling Interests (Note 2) | $ 74,340 | $ 73,461 | |
Share conversion ratio (in shares) | 1 | ||
Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 2) | $ 4,660 | $ 5,076 | |
Preferred shares - par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Maximum | Buildings and Improvements | |||
Class of Stock | |||
Useful life of buildings and improvements (in years) | 40 years | ||
Maximum | Furniture, Fixtures and Equipment | |||
Class of Stock | |||
Useful life of buildings and improvements (in years) | 7 years | ||
Minimum | Furniture, Fixtures and Equipment | |||
Class of Stock | |||
Useful life of buildings and improvements (in years) | 2 years | ||
Senior Common Equity Interest | |||
Class of Stock | |||
Noncontrolling interest, common equity interest (percent) | 12% | ||
Consolidated Joint Ventures | |||
Class of Stock | |||
Noncontrolling interest, ownership (percent) | 15% | ||
Cumulative return on common equity interest (percent) | 30% | ||
Consolidated Joint Ventures | Senior Common Equity Interest | |||
Class of Stock | |||
Cumulative return on common equity interest (percent) | 25% | ||
Consolidated Joint Ventures | Junior Common Equity Interest | |||
Class of Stock | |||
Noncontrolling interest, common equity interest (percent) | 8% | ||
Hersha Holding RC Owner, LLC | |||
Class of Stock | |||
Cumulative return on common equity interest (percent) | 70% | ||
Hersha Holding RC Owner, LLC | Senior Common Equity Interest | |||
Class of Stock | |||
Noncontrolling interest, common equity interest (percent) | 8% | ||
Cumulative return on common equity interest (percent) | 75% | ||
Common Shares | Noncontrolling Interests Common Units And LTIP Units | |||
Class of Stock | |||
Noncontrolling interest in limited partnerships | $ 73,461 | ||
Nonredeemable common units outstanding (in shares) | 8,037,472 | ||
Fair market value of nonredeemable common units | $ 79,249 | ||
Class A Common Shares | |||
Class of Stock | |||
Common shares - par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Class A Common Shares | Scenario, Plan | The Mergers | Surviving Partnership | |||
Class of Stock | |||
Common shares - par value (in dollars per share) | $ 0.01 | ||
Share price (in dollars per share) | $ 10 | ||
Series C | |||
Class of Stock | |||
Dividend Rate (percent) | 6.875% | ||
Series C | Scenario, Plan | The Mergers | Surviving Partnership | |||
Class of Stock | |||
Dividend Rate (percent) | 6.875% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 | ||
Series D | |||
Class of Stock | |||
Dividend Rate (percent) | 6.50% | ||
Series D | Scenario, Plan | The Mergers | Surviving Partnership | |||
Class of Stock | |||
Dividend Rate (percent) | 6.50% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 | ||
Series E | |||
Class of Stock | |||
Dividend Rate (percent) | 6.50% | ||
Series E | Scenario, Plan | The Mergers | Surviving Partnership | |||
Class of Stock | |||
Dividend Rate (percent) | 6.50% | ||
Preferred shares - par value (in dollars per share) | $ 0.01 | ||
Conversion price (in dollars per share) | $ 25 |
BASIS OF PRESENTATION (Schedule
BASIS OF PRESENTATION (Schedule Of Preferred Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Class of Stock | |||
Shares Outstanding (in shares) | 14,703,214 | 14,703,214 | |
Series C | |||
Class of Stock | |||
Shares Outstanding (in shares) | 3,000,000 | 3,000,000 | |
Aggregate Liquidation Preference | $ 75,000 | ||
Dividend Rate (percent) | 6.875% | ||
Dividend Per Share (in dollars per share) | $ 1.2891 | $ 1.2891 | |
Series D | |||
Class of Stock | |||
Shares Outstanding (in shares) | 7,701,700 | 7,701,700 | |
Aggregate Liquidation Preference | $ 192,500 | ||
Dividend Rate (percent) | 6.50% | ||
Dividend Per Share (in dollars per share) | $ 1.2188 | 1.2188 | |
Series E | |||
Class of Stock | |||
Shares Outstanding (in shares) | 4,001,514 | 4,001,514 | |
Aggregate Liquidation Preference | $ 100,000 | ||
Dividend Rate (percent) | 6.50% | ||
Dividend Per Share (in dollars per share) | $ 1.2188 | $ 1.2188 |
INVESTMENT IN HOTEL PROPERTIE_2
INVESTMENT IN HOTEL PROPERTIES (Investment In Hotel Properties) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment | ||
Total investment in hotel properties, gross | $ 1,723,005 | $ 1,694,581 |
Less Accumulated Depreciation | (546,561) | (505,342) |
Total Investment in Hotel Properties | 1,176,444 | 1,189,239 |
Variable Interest Entity, Primary Beneficiary | Ritz Coconut Grove | ||
Property, Plant and Equipment | ||
Total Investment in Hotel Properties | 36,176 | 37,303 |
Land | ||
Property, Plant and Equipment | ||
Total investment in hotel properties, gross | 390,532 | 390,532 |
Buildings and Improvements | ||
Property, Plant and Equipment | ||
Total investment in hotel properties, gross | 1,107,687 | 1,093,575 |
Furniture, Fixtures and Equipment | ||
Property, Plant and Equipment | ||
Total investment in hotel properties, gross | 216,477 | 203,369 |
Construction in Progress | ||
Property, Plant and Equipment | ||
Total investment in hotel properties, gross | $ 8,309 | $ 7,105 |
INVESTMENT IN HOTEL PROPERTIE_3
INVESTMENT IN HOTEL PROPERTIES (Narrative) (Details) - property | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Number of real estate properties acquired (property) | 0 | 0 |
INVESTMENT IN HOTEL PROPERTIE_4
INVESTMENT IN HOTEL PROPERTIES (Real Estate Assets Sold) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) property | |
Property, Plant and Equipment | |||||
Gain on Disposition | $ 0 | $ 167,800 | $ 0 | $ 167,800 | |
Disposed of by Sale | |||||
Property, Plant and Equipment | |||||
Gain on Disposition | $ 197,509 | ||||
Urban Select Service (7 hotels) | Disposed of by Sale | |||||
Property, Plant and Equipment | |||||
Consideration | 505,000 | ||||
Gain on Disposition | $ 170,193 | ||||
Number of real estate properties (property) | property | 7 | ||||
Hotel Milo Santa Barbara | Disposed of by Sale | |||||
Property, Plant and Equipment | |||||
Consideration | $ 55,000 | ||||
Gain on Disposition | 25,784 | ||||
Pan Pacific Seattle | Disposed of by Sale | |||||
Property, Plant and Equipment | |||||
Consideration | 70,000 | ||||
Gain on Disposition | 1,532 | ||||
Gate hotel JFK Airport | Disposed of by Sale | |||||
Property, Plant and Equipment | |||||
Consideration | 11,000 | ||||
Gain on Disposition | $ 0 |
INVESTMENT IN UNCONSOLIDATED _3
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Investment In Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Investments in Unconsolidated Joint Ventures | ||
Investment in Unconsolidated Joint Ventures | $ 4,068 | $ 4,989 |
SB Partners, LLC | ||
Investments in Unconsolidated Joint Ventures | ||
Percent owned (percentage) | 50% | |
Holiday Inn Express, South Boston, MA | SB Partners, LLC | ||
Investments in Unconsolidated Joint Ventures | ||
Percent owned (percentage) | 50% | |
Investment in Unconsolidated Joint Ventures | $ 0 | 0 |
Home2 Suites, South Boston, MA | SB Partners Three, LLC | ||
Investments in Unconsolidated Joint Ventures | ||
Percent owned (percentage) | 50% | |
Investment in Unconsolidated Joint Ventures | $ 4,068 | $ 4,989 |
INVESTMENT IN UNCONSOLIDATED _4
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Investments in Unconsolidated Joint Ventures | ||||
Distributions from Unconsolidated Joint Ventures | $ 500 | $ 0 | ||
Equity method investments | $ 4,068 | $ 4,068 | $ 4,989 | |
SB Partners, LLC | ||||
Investments in Unconsolidated Joint Ventures | ||||
Distributions from Unconsolidated Joint Ventures | $ 500 | |||
Percent owned (percentage) | 50% | 50% | ||
Hilton and IHG branded hotels in NYC | Cindat Hersha Owner JV, LLC | ||||
Investments in Unconsolidated Joint Ventures | ||||
Equity method investments | $ 0 | $ 0 |
INVESTMENT IN UNCONSOLIDATED _5
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Income Or Loss From Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Nov. 29, 2022 | |
Investments in Unconsolidated Joint Ventures | |||||
Income (Loss) from Unconsolidated Joint Venture Investments | $ 5 | $ 478 | $ (421) | $ (101) | |
Hiren Boston, LLC | |||||
Investments in Unconsolidated Joint Ventures | |||||
Income (Loss) from Unconsolidated Joint Venture Investments | 0 | 394 | 0 | 436 | |
Percent owned (percentage) | 50% | ||||
SB Partners, LLC | |||||
Investments in Unconsolidated Joint Ventures | |||||
Income (Loss) from Unconsolidated Joint Venture Investments | $ 0 | 0 | $ 0 | (310) | |
Percent owned (percentage) | 50% | 50% | |||
SB Partners Three, LLC | |||||
Investments in Unconsolidated Joint Ventures | |||||
Income (Loss) from Unconsolidated Joint Venture Investments | $ 5 | $ 84 | $ (421) | $ (227) |
INVESTMENT IN UNCONSOLIDATED _6
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Schedule Of Unconsolidated Joint Ventures Balance Sheet) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Investment in Hotel Properties, Net | $ 1,176,444 | $ 1,189,239 |
Other Assets | 33,300 | 38,552 |
Total Assets | 1,388,458 | 1,488,877 |
Liabilities and Equity | ||
Mortgages | 184,730 | 208,354 |
Other Liabilities | 1,369 | 2,610 |
Equity: | ||
Hersha Hospitality Trust | 658,360 | 683,000 |
Joint Venture Partner(s) | 74,340 | 73,461 |
Total Liabilities and Equity | 1,388,458 | 1,488,877 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||
Assets | ||
Investment in Hotel Properties, Net | 44,247 | 47,356 |
Other Assets | 12,131 | 11,803 |
Total Assets | 56,378 | 59,159 |
Liabilities and Equity | ||
Mortgages | 49,304 | 50,236 |
Other Liabilities | 10,196 | 10,012 |
Equity: | ||
Hersha Hospitality Trust | 1,613 | 2,630 |
Joint Venture Partner(s) | (4,735) | (3,719) |
Total Equity | (3,122) | (1,089) |
Total Liabilities and Equity | $ 56,378 | $ 59,159 |
INVESTMENT IN UNCONSOLIDATED _7
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Summary Of Unconsolidated Joint Ventures Income Statement) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Operations | ||||
Other Revenue | $ 93 | $ 107 | $ 236 | $ 239 |
Lease Expense | (682) | (1,353) | (1,993) | (4,372) |
Property Taxes and Insurance | (6,767) | (7,561) | (19,207) | (24,379) |
General and Administrative | (6,049) | (5,883) | (16,751) | (17,692) |
Depreciation and Amortization | (13,794) | (14,900) | (41,469) | (51,179) |
Interest Expense | (9,000) | (11,333) | (26,954) | (39,600) |
Income Tax Expense | (275) | (5,402) | (374) | (5,516) |
Net Income (Loss) | 952 | 136,189 | (2,588) | 129,174 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||||
Statement of Operations | ||||
Other Revenue | 208 | 405 | 531 | 909 |
Operating Expenses | (2,854) | (4,156) | (7,182) | (10,239) |
Lease Expense | (159) | (320) | (478) | (834) |
Property Taxes and Insurance | (417) | (588) | (1,170) | (1,732) |
General and Administrative | 7 | (71) | 78 | (107) |
Depreciation and Amortization | (1,041) | (1,244) | (3,184) | (3,746) |
Interest Expense | (851) | (923) | (2,490) | (2,364) |
Income Tax Expense | (140) | (114) | (140) | (62) |
Net Income (Loss) | 421 | 1,155 | (1,032) | (514) |
Room Revenue | ||||
Statement of Operations | ||||
Room Revenue | 70,159 | 81,473 | 202,321 | 244,847 |
Operating Expenses | (15,487) | (17,892) | (45,494) | (51,929) |
Room Revenue | Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||||
Statement of Operations | ||||
Room Revenue | $ 5,668 | $ 8,166 | $ 13,003 | $ 17,661 |
INVESTMENT IN UNCONSOLIDATED _8
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Reconciliation Of Share In Unconsolidated Joint Ventures' Equity In Investment In Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Equity Method Investments and Joint Ventures [Abstract] | ||
Our share of equity recorded on the joint ventures' financial statements | $ 1,613 | $ 2,630 |
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures | 2,455 | 2,359 |
Investment in Unconsolidated Joint Ventures | $ 4,068 | $ 4,989 |
OTHER ASSETS (Other Assets) (De
OTHER ASSETS (Other Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Derivative Asset | $ 12,606 | $ 18,709 |
Deferred Financing Costs | 630 | 1,197 |
Prepaid Expenses | 11,989 | 10,481 |
Investment in Statutory Trusts | 1,548 | 1,548 |
Investment in Non-Hotel Property and Inventories | 1,859 | 2,026 |
Deposits with Unaffiliated Third Parties | 362 | 597 |
Deferred Tax Asset, Net of Valuation Allowance of $13,903 and $14,414, respectively | 0 | 0 |
Swap Interest Receivable | 1,176 | 932 |
Other | 3,130 | 3,062 |
Total other assets | 33,300 | 38,552 |
Deferred tax assets, net of valuation allowance | $ 13,903 | $ 14,414 |
OTHER ASSETS (Narrative) (Detai
OTHER ASSETS (Narrative) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred tax assets, net | $ 0 | $ 0 |
DEBT (Mortgages) (Details)
DEBT (Mortgages) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Mortgages and Notes Payable | ||
Net Unamortized Deferred Financing Costs | $ (1,167) | $ (2,217) |
Mortgages | ||
Mortgages and Notes Payable | ||
Mortgage Indebtedness | 184,952 | 208,880 |
Net Unamortized Premium | 2 | 7 |
Net Unamortized Deferred Financing Costs | (224) | (533) |
Mortgages Payable | 184,730 | 208,354 |
Junior Subordinated Debt | Hersha Statutory Trust I and Hersha Statutory Trust II | ||
Mortgages and Notes Payable | ||
Mortgage Indebtedness | 51,548 | 51,548 |
Net Unamortized Deferred Financing Costs | (613) | (653) |
Mortgages Payable | $ 50,935 | $ 50,895 |
DEBT (Mortgage Narrative) (Deta
DEBT (Mortgage Narrative) (Details) - Mortgages - USD ($) | May 01, 2023 | Sep. 30, 2023 | Jun. 07, 2023 | Jun. 06, 2023 |
Minimum | ||||
Debt Instrument | ||||
Debt instrument, effective interest rate (percent) | 4.02% | |||
Maximum | ||||
Debt Instrument | ||||
Debt instrument, effective interest rate (percent) | 8.09% | |||
Secured Debt | ||||
Debt Instrument | ||||
Mortgage debt | $ 23,000,000 | |||
Debt extinguishment | $ 52,000 | |||
Debt instrument, face amount | $ 56,000,000 | |||
Debt instrument, interest rate, percentage | 7.39% |
DEBT (Credit Facilities Narrati
DEBT (Credit Facilities Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||||
Aug. 04, 2022 USD ($) agreement | Sep. 30, 2023 USD ($) | Sep. 30, 2022 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 | Dec. 31, 2022 USD ($) | |
Debt Instrument | ||||||
Line of credit facility covenant fixed charge coverage ratio | 1.50 | |||||
Line of credit facility covenant maximum leverage ratio (percentage) | 60% | |||||
Revolving Line Of Credit | Weighted Average | ||||||
Debt Instrument | ||||||
Line of credit, weighted average interest rate (percentage) | 4.42% | 4.46% | 3.90% | 3.47% | ||
$250 Million Term Loan (First Term Loan) | ||||||
Debt Instrument | ||||||
Debt instrument, face amount | $ 400,000,000 | $ 347,853,000 | $ 347,853,000 | $ 372,853,000 | ||
Number of unsecured credit agreements (agreements) | agreement | 3 | |||||
Mortgage debt | $ 497,481,000 | |||||
$250 Million Senior Revolving Line Of Credit (Line of Credit) | Revolving Line Of Credit | ||||||
Debt Instrument | ||||||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 | |||||
$250 Million Senior Revolving Line Of Credit (Line of Credit) | Revolving Line Of Credit | SOFR | ||||||
Debt Instrument | ||||||
Debt instrument, basis spread on variable rate (percent) | 2.50% |
DEBT (Summary Of Balances Outst
DEBT (Summary Of Balances Outstanding) (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Aug. 04, 2022 |
Short-term Debt | |||
Deferred Loan Costs | $ (1,167,000) | $ (2,217,000) | |
Total Secured Term Loan | 346,686,000 | 370,636,000 | |
$250 Million Term Loan (First Term Loan) | |||
Short-term Debt | |||
Principal | $ 347,853,000 | $ 372,853,000 | $ 400,000,000 |
DEBT (Statutory Trust I And Sta
DEBT (Statutory Trust I And Statutory Trust II Notes Payable) (Details) - Junior Subordinated Debt $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) loan | Sep. 30, 2022 | Sep. 30, 2023 USD ($) loan | Sep. 30, 2022 | |
Hersha Statutory Trust I and Hersha Statutory Trust II | ||||
Debt Instrument | ||||
Number of instruments held | loan | 2 | 2 | ||
Subordinated debt | $ 51,548 | $ 51,548 | ||
Number of business days prior to quarterly interest payments for resetting rates | 2 days | |||
Debt instrument, interest rate during period (in hundredths) | 8.52% | 8.14% | 5.25% | 4.16% |
Hersha Statutory Trust I | ||||
Debt Instrument | ||||
Subordinated debt | $ 25,774 | $ 25,774 | ||
Spread adjustment (percent) | 0.26% | 0.26% | ||
Hersha Statutory Trust I | LIBOR | ||||
Debt Instrument | ||||
Debt instrument, basis spread on variable rate (percent) | 3% | |||
Hersha Statutory Trust I | SOFR | ||||
Debt Instrument | ||||
Debt instrument, basis spread on variable rate (percent) | 3% | |||
Hersha Statutory Trust II | ||||
Debt Instrument | ||||
Subordinated debt | $ 25,774 | $ 25,774 | ||
Spread adjustment (percent) | 0.26% | 0.26% | ||
Hersha Statutory Trust II | LIBOR | ||||
Debt Instrument | ||||
Debt instrument, basis spread on variable rate (percent) | 3% | |||
Hersha Statutory Trust II | SOFR | ||||
Debt Instrument | ||||
Debt instrument, basis spread on variable rate (percent) | 3% |
DEBT (Schedule Of Interest Expe
DEBT (Schedule Of Interest Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument | ||||
Deferred Financing Costs Amortization | $ 652 | $ 896 | $ 2,012 | $ 3,322 |
Other | 93 | 116 | 276 | 353 |
Total Interest Expense | 9,000 | 11,333 | 26,954 | 39,600 |
Line of credit | ||||
Debt Instrument | ||||
Interest expense | 6,973 | 5,455 | 20,520 | 13,611 |
Interest Rate Swap | Line of credit | ||||
Debt Instrument | ||||
Interest expense | (3,044) | (675) | (8,388) | 1,378 |
Mortgages | ||||
Debt Instrument | ||||
Interest expense | 3,683 | 3,503 | 11,192 | 8,980 |
Mortgages | Hersha Statutory Trust I and Hersha Statutory Trust II | ||||
Debt Instrument | ||||
Interest expense | 1,123 | 2,222 | 3,192 | 11,217 |
Mortgages | Interest Rate Swap | ||||
Debt Instrument | ||||
Interest expense | $ (480) | $ (184) | $ (1,850) | $ 739 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) - Building | Sep. 30, 2023 property lease |
Lessee, Lease, Description | |
Number of real estate properties (property) | property | 2 |
Number of lease agreements (leases) | lease | 2 |
LEASES (Lease Costs) (Details)
LEASES (Lease Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description | ||||
Operating lease costs | $ 353 | $ 1,064 | $ 1,215 | $ 3,408 |
Variable lease costs | 329 | 289 | 778 | 964 |
Total lease costs | 682 | 1,353 | 1,993 | 4,372 |
Ground Lease | ||||
Lessee, Lease, Description | ||||
Operating lease costs | 302 | 943 | 909 | 3,045 |
Variable lease costs | 284 | 242 | 606 | 761 |
Total lease costs | 586 | 1,185 | 1,515 | 3,806 |
Office Lease | ||||
Lessee, Lease, Description | ||||
Operating lease costs | 51 | 121 | 306 | 363 |
Variable lease costs | 45 | 47 | 172 | 203 |
Total lease costs | $ 96 | $ 168 | $ 478 | $ 566 |
LEASES (Other Information) (Det
LEASES (Other Information) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||
Cash paid from operating cash flow for operating leases | $ 2,048 | $ 4,080 |
Weighted average remaining lease term (in years) | 48 years 8 months 12 days | 66 years 4 months 24 days |
Weighted average discount rate (in percent) | 7.84% | 7.87% |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Management Agreements | |||||
Term of management agreements with HHMLP (in years) | 5 years | ||||
Base management fee as percentage of gross revenues (percentage) | 3% | ||||
Base management fees incurred | $ 2,531 | $ 6,411 | $ 2,675 | $ 7,818 | |
Accounting, Revenue Management and Information Technology Fees | |||||
Accounting fees | 204 | 244 | 613 | 799 | |
Information technology fees | 70 | 80 | 206 | 257 | |
Revenue management service fees | 449 | 515 | 1,347 | 1,664 | |
Capital Expenditure Fees | |||||
Fees incurred on capital expenditures | 149 | 804 | $ 126 | 420 | |
Acquisitions From Affiliates | |||||
Period of right of first refusal per option agreement with officers and affiliated trustees after termination | 1 year | ||||
Hotel Supplies | |||||
Hotel supplies | 12 | 0 | $ 12 | 0 | |
Charges for capital expenditure purchases | 4,847 | 1,150 | 15,559 | 5,691 | |
Due from Related Parties, Unclassified | |||||
Due from Related Parties | 232 | 232 | $ 245 | ||
Due to Related Parties | |||||
Due to Related Parties | 1,369 | 1,369 | 2,610 | ||
General and Administrative Expense | |||||
Insurance Services | |||||
Service fees | 124 | 371 | 146 | 439 | |
Related Party | |||||
Due from Related Parties, Unclassified | |||||
Due from Related Parties | 232 | 232 | 245 | ||
Due to Related Parties | |||||
Due to Related Parties | $ 1,369 | $ 1,369 | $ 2,610 | ||
Hotel | |||||
Lessee Disclosure | |||||
Number of real estate properties (property) | property | 1 | 1 | |||
Fee revenue | $ 39 | 61 | $ 143 | 172 | |
Franchise | |||||
Franchise Agreements | |||||
Franchise fee expense | $ 3,829 | $ 10,312 | $ 4,181 | $ 12,595 | |
Minimum | |||||
Franchise Agreements | |||||
Terms of franchise agreements (in years) | 10 years | ||||
Accounting, Revenue Management and Information Technology Fees | |||||
Monthly fees for accounting services per property for hotels managed by HHMLP | $ 2 | ||||
Monthly information technology fees per property for hotels managed by HHMLP, minimum | $ 1 | ||||
Capital Expenditure Fees | |||||
Fee on all capital expenditures and pending renovation projects at the properties (percentage) | 3% | ||||
Maximum | |||||
Franchise Agreements | |||||
Terms of franchise agreements (in years) | 20 years | ||||
Accounting, Revenue Management and Information Technology Fees | |||||
Monthly fees for accounting services per property for hotels managed by HHMLP | $ 3 | ||||
Monthly information technology fees per property for hotels managed by HHMLP, minimum | $ 2 | ||||
Capital Expenditure Fees | |||||
Fee on all capital expenditures and pending renovation projects at the properties (percentage) | 5% |
FAIR VALUE MEASUREMENTS AND D_3
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Fair Value Of Interest Rate Swaps And Caps) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value | ||
Estimated Fair Value | $ 12,606 | $ 18,709 |
Interest Rate Swap | Credit Facility August 30, 2022 | ||
Derivatives, Fair Value | ||
Strike Rate | 1.341% | |
Notional Amount | $ 270,000 | |
Estimated Fair Value | $ 9,988 | 14,123 |
Interest Rate Swap | Credit Facility August 30, 2022 | 1 Month SOFR | ||
Derivatives, Fair Value | ||
Index | 2.50% | |
Interest Rate Swap | Credit Facility September 6, 2022 | ||
Derivatives, Fair Value | ||
Strike Rate | 1.279% | |
Notional Amount | $ 30,000 | |
Estimated Fair Value | $ 1,017 | 1,533 |
Interest Rate Swap | Credit Facility September 6, 2022 | 1 Month SOFR | ||
Derivatives, Fair Value | ||
Index | 2.50% | |
Interest Rate Swap | Hyatt, Union Square, New York, NY | ||
Derivatives, Fair Value | ||
Strike Rate | 1.87% | |
Notional Amount | $ 56,000 | |
Estimated Fair Value | $ 0 | 699 |
Interest Rate Swap | Hyatt, Union Square, New York, NY | 1 Month LIBOR | ||
Derivatives, Fair Value | ||
Index | 2.30% | |
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY | ||
Derivatives, Fair Value | ||
Strike Rate | 1.768% | |
Notional Amount | $ 22,725 | |
Estimated Fair Value | $ 678 | 1,007 |
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY | 1 Month LIBOR | ||
Derivatives, Fair Value | ||
Index | 2.25% | |
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY | ||
Derivatives, Fair Value | ||
Strike Rate | 1.768% | |
Notional Amount | $ 22,725 | |
Estimated Fair Value | $ 678 | 1,007 |
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY | 1 Month LIBOR | ||
Derivatives, Fair Value | ||
Index | 2.25% | |
Interest Rate Cap | Hilton Garden Inn 52nd Street, New York, NY | ||
Derivatives, Fair Value | ||
Strike Rate | 4% | |
Notional Amount | $ 44,325 | |
Estimated Fair Value | $ 100 | 340 |
Interest Rate Swap | Hyatt, Union Square, New York, NY | ||
Derivatives, Fair Value | ||
Strike Rate | 4.988% | |
Notional Amount | $ 56,000 | |
Estimated Fair Value | $ 145 | $ 0 |
Interest Rate Swap | Hyatt, Union Square, New York, NY | 1 Month SOFR | ||
Derivatives, Fair Value | ||
Index | 2.40% |
FAIR VALUE MEASUREMENTS AND D_4
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Derivatives, Fair Value | |||||
(Loss) gain on fair value of derivative instruments | $ (2,701) | $ (6,005) | $ 5,799 | $ 25,902 | |
Unrealized gain (losses) reclassified from accumulated other comprehensive income to interest expense | 46 | $ 98 | (136) | $ (875) | |
Loss to be reclassified to interest expense during next 12 months | 12,847 | 12,847 | |||
Carrying (Reported) Amount, Fair Value Disclosure | |||||
Derivatives, Fair Value | |||||
Carrying value and estimated fair value of debt | 582,351 | 582,351 | $ 629,885 | ||
Estimate of Fair Value, Fair Value Disclosure | |||||
Derivatives, Fair Value | |||||
Carrying value and estimated fair value of debt | $ 566,640 | $ 566,640 | $ 610,401 |
SHARE BASED PAYMENTS (Narrative
SHARE BASED PAYMENTS (Narrative) (Details) - $ / shares | 9 Months Ended | |||||
Jun. 21, 2023 | Mar. 09, 2023 | Jan. 01, 2023 | Mar. 22, 2022 | Sep. 30, 2023 | Aug. 27, 2023 | |
Scenario, Plan | The Mergers | Class A Common Shares | Surviving Partnership | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Equity shares conversion rate (in dollars per share) | $ 10 | |||||
LTIP Unit Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Performance period (years) | 2 years | |||||
Compensation cost not yet recognized, period for recognition (in years) | 1 year 7 months 6 days | |||||
LTIP Unit Awards | 2023 Long Term Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Performance period (years) | 3 years | |||||
LTIP Unit Awards | 2023 Long Term Incentive Plan | 2023 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting schedule (percentage) | 40% | |||||
LTIP Unit Awards | 2023 Long Term Incentive Plan | 2024 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting schedule (percentage) | 60% | |||||
Performance period (years) | 3 years | |||||
LTIP Unit Awards | Multi Year Ltip | 2023 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Shareholders return as percentage of award for achievement (in hundredths) | 37.50% | |||||
LTIP Unit Awards | Multi Year Ltip | 2024 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Shareholders return as percentage of award for achievement (in hundredths) | 37.50% | |||||
LTIP Unit Awards | Multi Year Ltip | 2025 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Shareholders return as percentage of award for achievement (in hundredths) | 25% | |||||
Restricted Share Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Compensation cost not yet recognized, period for recognition (in years) | 1 year 1 month 6 days |
SHARE BASED PAYMENTS (Summary O
SHARE BASED PAYMENTS (Summary Of Share Based Compensation Activity) (Details) | 9 Months Ended | |||
Jun. 21, 2023 d $ / shares shares | Mar. 22, 2022 $ / shares shares | Sep. 30, 2023 $ / shares shares | Mar. 22, 2023 d | |
2023 Long Term Incentive Plan | ||||
Weighted Average Grant Date Fair Value | ||||
Weighted average trading price (in dollars per share) | $ / shares | $ 9.32 | |||
LTIP Unit Awards | ||||
Number of Units | ||||
Unvested balance, beginning of the period (in shares) | 1,105,573 | |||
Granted (in shares) | 1,104,874 | 1,297,419 | ||
Vested (in shares) | (51,452) | |||
Forfeited (in shares) | 0 | |||
Unvested balance, end of the period (in shares) | 2,351,540 | |||
Weighted Average Grant Date Fair Value | ||||
Unvested balance, beginning of the period (in dollars per share) | $ / shares | $ 9.65 | |||
Granted (in dollars per share) | $ / shares | 5.90 | |||
Vested (in dollars per share) | $ / shares | 5.90 | |||
Unvested balance, ending of the period (in dollars per share) | $ / shares | $ 7.66 | |||
Performance period (years) | 2 years | |||
Volume weighted average share price ( in dollars per share) | $ / shares | $ 9.32 | |||
Trading days | d | 20 | |||
LTIP Unit Awards | 2023 Long Term Incentive Plan | ||||
Number of Units | ||||
Granted (in shares) | 192,545 | |||
Weighted Average Grant Date Fair Value | ||||
Performance period (years) | 3 years | |||
Trading days | d | 20 | |||
Restricted Share Awards | ||||
Number of Units | ||||
Unvested balance, beginning of the period (in shares) | 164,166 | |||
Granted (in shares) | 52,710 | |||
Vested (in shares) | (122,423) | |||
Forfeited (in shares) | (2,767) | |||
Unvested balance, end of the period (in shares) | 91,686 | |||
Weighted Average Grant Date Fair Value | ||||
Unvested balance, beginning of the period (in dollars per share) | $ / shares | $ 9.83 | |||
Granted (in dollars per share) | $ / shares | 5.90 | |||
Vested (in dollars per share) | $ / shares | 10.03 | |||
Forfeited (in dollars per share) | $ / shares | 10.52 | |||
Unvested balance, ending of the period (in dollars per share) | $ / shares | $ 7.29 | |||
Share Awards | ||||
Number of Units | ||||
Unvested balance, beginning of the period (in shares) | 0 | |||
Granted (in shares) | 145,615 | |||
Vested (in shares) | (145,615) | |||
Forfeited (in shares) | 0 | |||
Unvested balance, end of the period (in shares) | 0 | |||
Weighted Average Grant Date Fair Value | ||||
Granted (in dollars per share) | $ / shares | $ 6.36 | |||
Vested (in dollars per share) | $ / shares | $ 6.36 |
SHARE BASED PAYMENTS (Summary_2
SHARE BASED PAYMENTS (Summary Of Share Based Compensation Expense And Unearned Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share Based Compensation Expense | $ 2,339 | $ 2,768 | $ 7,088 | $ 8,608 | |
Unearned Compensation | 8,679 | 8,679 | $ 8,535 | ||
LTIP Unit Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share Based Compensation Expense | 1,857 | 1,960 | 4,584 | 5,878 | |
Unearned Compensation | 5,689 | 5,689 | 5,311 | ||
Restricted Share Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share Based Compensation Expense | 98 | 228 | 473 | 767 | |
Unearned Compensation | 358 | 358 | 683 | ||
Share Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share Based Compensation Expense | 45 | 152 | 1,060 | 916 | |
Unearned Compensation | 0 | 0 | 0 | ||
Market Based | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share Based Compensation Expense | 339 | $ 428 | 971 | $ 1,047 | |
Unearned Compensation | $ 2,632 | $ 2,632 | $ 2,541 |
SHARE BASED PAYMENTS (Remaining
SHARE BASED PAYMENTS (Remaining Unvested Target Units Expected To Vest) (Details) | Sep. 30, 2023 shares |
2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 1,110,621 |
2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 1,250,496 |
2025 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 74,645 |
2026 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 7,464 |
LTIP Unit Awards | 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 1,110,621 |
LTIP Unit Awards | 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 1,176,738 |
LTIP Unit Awards | 2025 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 64,181 |
LTIP Unit Awards | 2026 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 0 |
Restricted Share Awards | 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 0 |
Restricted Share Awards | 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 73,758 |
Restricted Share Awards | 2025 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 10,464 |
Restricted Share Awards | 2026 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Remaining unvested target units, expected to vest (in units) | 7,464 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Basic and Diluted | |||||
Net income (loss) | $ 952 | $ 136,189 | $ (2,588) | $ 129,174 | |
Loss (Income) Allocated to Noncontrolling Interests | 629 | (14,668) | 3,038 | (15,374) | |
Distributions to Preferred Shareholders | (6,043) | (6,044) | (18,130) | (18,131) | |
Dividends Paid on Unvested Restricted Shares and LTIP Units | (122) | (101) | (361) | (101) | |
Net (loss) income applicable to Common Shareholders | $ (4,584) | $ 115,376 | $ (18,041) | $ 95,568 | |
DENOMINATOR: | |||||
Weighted average number of common shares - basic (in shares) | 40,012,965 | 39,465,645 | 39,831,101 | 39,325,679 | |
Effect of dilutive securities: | |||||
Restricted Stock Awards and LTIP Units (unvested) (in shares) | 0 | 1,095,727 | 0 | 979,938 | |
Contingently Issued Shares and Units (in shares) | 0 | 401,401 | 0 | 364,489 | |
Weighted average number of common shares - diluted (in shares) | [1] | 40,012,965 | 40,962,773 | 39,831,101 | 40,670,106 |
[1](Loss) Income allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because the effect of including these shares and units in the numerator and denominator would have no impact. In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to (loss) income applicable to common shareholders. The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Common Units and Vested LTIP Units 5,685,932 5,153,282 5,766,093 5,227,200 Unvested Stock Awards and LTIP Units Outstanding 1,773,472 — 1,268,817 — Contingently Issuable Share Awards 380,566 — 632,437 — Total Potentially Dilutive Securities Excluded from the Denominator 7,839,970 5,153,282 7,667,347 5,227,200 |
CASH FLOW DISCLOSURES AND NON_3
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Narrative) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 34,886 | $ 31,087 |
Net payments for interest rate derivatives | 10,093 | 4,347 |
Cash paid for income taxes | $ 4,762 | $ 1,246 |
CASH FLOW DISCLOSURES AND NON_4
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Non-cash Investing And Financing Activities) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Noncash Investing and Financing Items [Abstract] | ||
Issuance of share based payments | $ 9,181 | $ 5,462 |
Accrued payables for capital expenditures placed into service | 666 | 1,222 |
Adjustment to Record Noncontrolling Interest at Redemption Value | (416) | 2,349 |
Adjustment to Record Right of Use Asset & Lease Liability | $ 917 | $ 0 |
CASH FLOW DISCLOSURES AND NON_5
CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Reconciliation Of Cash) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | ||||
Cash and cash equivalents | $ 146,145 | $ 224,955 | $ 94,271 | |
Escrowed cash | 4,948 | 5,065 | 13,129 | |
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ 151,093 | $ 230,020 | $ 107,400 | $ 84,945 |