SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 8, 2000
HERSHA HOSPITALITY TRUST
(Exact name of registrant as specified in its charter)
Maryland 005-55249 251811499
(State or other jurisdiction (Commission File No.) I.R.S. Employer
of incorporation) (Identification No.)
148 Sheraton Drive, Box A
New Cumberland, Pennsylvania 17070
(Address of principal executive offices)
(717) 770-2405
(Registrant's telephone number, including area code)
N/A
(former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
On February 25, 2000, the Board of Trustees of Hersha Hospitality Trust
(the "Company") approved the acquisition of all the partnership interests in
three Pennsylvania limited partnerships. The Board approved the acquisition of
3144 Associates and, through the ownership of 3144 Associates, a 110-room
Hampton Inn & Suites hotel located in Hershey, Pennsylvania, the partnership
interests in 1844 Associates, a Pennsylvania limited partnership and, through
the ownership of 1844 Associates, a 96-room Best Western hotel located in
Indiana, Pennsylvania, and the acquisition of 1544 Associates and, through the
ownership of 1544 Associates, a 77-room Comfort Inn located in McHenry,
Maryland. The Company closed on these acquisitions, which were effective as of
January 1, 2000, on March 8, 2000.
3144 Associates, 1844 Associates and 1544 Associates were established
as Pennsylvania limited partnerships owned by Hasu P. Shah, Kanti D. Patel,
Rajendra O. Gandhi, Jay H. Shah, Kiran P. Patel, Bharat C. Mehta, David L.
Desfor and certain other affiliates of the Company (the "Hersha Affiliates").
All of the limited partnership interests in 3144 Associates, 1844 Associates and
1544 Associates were contributed to Hersha Hospitality Limited Partnership
("HHLP" or the "Partnership"). Further, the general partnership interest in 3144
Associates, 1844 Associates and 1544 Associates, which was owned by a Hersha
affiliated entity, Shreenathji Enterprises, Ltd., was contributed to Hersha
Hospitality, LLC, a Virginia limited liability company ("HHLLC"). HHLP is the
sole member of HHLLC. Upon the transfer of both limited partnership and general
partnership interests by the Hersha affiliates, 3144 Associates, 1844 Associates
and 1544 Associates became wholly-owned subsidiaries of HHLP. 3144 Associates,
1844 Associates and 1544 Associates do not own any assets other than the Hampton
Inn & Suites hotel, the Best Western Hotel and the Comfort Inn, respectively.
The partnership interests in 3144 Associates, 1844 Associates and 1544
Associates were purchased for $7.5 million, $2.2 million and $1.8 million,
respectively. The purchase price valuations for the properties acquired from the
Hersha Affiliates were based upon the rent to be paid by Hersha Hospitality
Management, L.P., the lessee of the Partnership's other hotel properties (the
"Lessee"), under percentage leases. The purchase prices of these hotels will be
adjusted on December 31, 2001 by applying a pricing methodology to such hotels'
cash flows in a manner similar to that of the other hotels purchased by HHLP
from the Hersha Affiliates. The adjustments must be approved by a majority of
the Company's independent trustees.
The Partnership acquired all the partnership interests in 3144
Associates and consequently the Hampton Inn & Suites, through the assumption of
approximately $5.5 million of mortgage indebtedness and the use of borrowings
under the Company's line of credit.
The Partnership acquired all the partnership interests in 1844
Associates and consequently the Best Western, through the assumption of
approximately $1.4 million of mortgage indebtedness and the use of borrowings
under the Company's line of credit.
The Partnership acquired all the partnership interests in 1544
Associates and consequently the Comfort Inn, through the assumption of
approximately $1.2 million of mortgage indebtedness and the use of borrowings
under the Company's line of credit.
Following the acquisition of the hotels, the property was leased by the
Partnership to the Lessee. The Lessee is a limited partnership owned by Hasu P.
Shah, the Company's Chief Executive Officer, and the Hersha Affiliates. The
hotels are leased pursuant to a percentage leases that provides for rent based
in part on the room revenues from the hotels. The leases went into effect as of
January 1, 2000.
The following table sets forth (i) the Initial Fixed Rent, (ii) Annual
Base Rent and (iii) the annual Percentage Rent formula currently anticipated for
these hotels:
Acquired Initial Base
Hotel Fixed Rent Rent Percentage Rent Formula
- ----- ---------- ---- -----------------------
Hampton Inn & Suites, $1,040,476 $487,528 51.2% of room revenue up to
Hershey, PA $1,643,560, plus 65% of room
revenue in excess of $1,643,560 but
less than $1,933,600, plus 29.0% of
room revenue in excess of
$1,933,600, plus 8.0% of all
non-room revenue.
Best Western, $354,301 $143,001 34.5% of room revenue up to
Indiana, PA $726,750, plus 65% of room revenue
in excess of $726,750 but less than
$855,000, plus 29.0% of room
revenue in excess of $855,000, plus
8.0% of all non-room revenue.
Comfort Inn, $268,360 $117,043 34.0% of room revenue up to
McHenry, MD $587,350, plus 65% of room revenue
in excess of $587,350 but less than
$691,000, plus 29.0% of room
Revenue in excess of $691,000, plus
8.0% of all non-room revenue.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements. No financial statements are required to be
filed in connection with these acquisitions pursuant to
Rule 3-05 of Regulation S-X.
(b) Pro Forma Financial Statements. No pro forma financial statements
are required to be filed in connection with this
acquisition pursuant to Rule 11-01 of Regulation S-X.
(c) Exhibits. The following exhibits are required by Item 601 of
Regulation S-K and are listed below:
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Contribution Agreement - Hampton Inn & Suites, Hershey, Pennsylvania
10.2 Contribution Agreement - Best Western, Indiana, Pennsylvania
10.3 Contribution Agreement - Comfort Inn, McHenry, Maryland
10.4 Form of Percentage Lease for the Hampton Inn & Suites, Best
Western and Comfort Inn
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HERSHA HOSPITALITY TRUST
Date: March 23, 2000 By: /s/ Hasu P. Shah
-----------------------------
Hasu P. Shah
Chief Executive Officer