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): July 23, 2001
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 July 23, 2001, Hersha Hospitality Trust (the "Company"), through its
interest in Hersha Hospitality L.P. (the "Partnership" or "HHLP"), completed its
acquisition of all the assets of 3244 Associates, a Pennsylvania limited
partnership and through the ownership of 3244 Associates, (the "Partnership"), a
69-room Mainstay Suites hotel and a 87-room Sleep Inn hotel both located in King
of Prussia, Pennsylvania.
3244 Associates was established as a Pennsylvania limited partnership owned
by Hasu P. Shah, Kanti D. Patel, Rajendra O. Gandhi, Jay H. Shah, Kiran P.
Patel, and Neil H. Shah (the "Hersha Affiliates"). Hersha Hospitality Limited
Partnership has purchased all of the assets of 3244 Associates. 3244 Associates
does not own any assets other than the Mainstay Suites and Sleep Inn, King of
Prussia, PA.
HHLP purchased all of the assets of 3244 Associates for $9,444,545. The
purchase price valuation was based upon the rent to be paid by Hersha
Hospitality Management, L.P., ("HHMLP"), the lessee of several of the
Partnership's other hotel properties, under percentage leases. The purchase
price of this hotel will be adjusted on December 31, 2003 by applying a pricing
methodology to such hotel's 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 assets in 3244 Associates and consequently
the Mainstay Suites and Sleep Inn through the assumption of approximately $6.8
million of mortgage indebtedness, and the use of borrowings under the Company's
line of credit.
Following the acquisition of the hotel, the property will be leased by the
Partnership to HHMLP. The Lessee is a limited partnership owned by Hasu P. Shah,
the Company's Chief Executive Officer, and the Hersha Affiliates. The hotel is
leased pursuant to a percentage lease that provides for rent based in part on
the room revenues from the hotel. The lease went into effect as of June 1, 2001.
The following table sets forth (i) the Initial Fixed Rent, (ii) Annual Base
Rent and (iii) the annual Percentage Rent formula currently anticipated for this
hotel:
Acquired Initial Base
Hotels Fixed Rent Rent Percentage Rent Formula
- ----------------------- ---------- -------- --------------------------------
Mainstay Suites $1,352,010 $613,798 43.7% of room revenue up to
and Sleep Inn, $2,434,590 plus 65% of room
King of Prussia, PA revenues in excess of
$2,434,590 but less than
$2,864,224 plus 29.0% of room
revenue in excess of
$2,864,224, 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 this acquisition 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 Sales Agreement
====
10.2 Form of Percentage Lease
====
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: August 6, 2001 By: /s/ Hasu P. Shah
----------------------------
Hasu P. Shah
Chief Executive Officer