HUNTON & WILLIAMS LLP
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074
TEL 804 - 788 - 8200
FAX 804 - 788 - 8218
March 1, 2004
Hersha Hospitality Trust
148 Sheraton Drive, Box A
New Cumberland, Pennsylvania 17070
Hersha Hospitality Trust
------------------------
Qualification as
----------------
Real Estate Investment Trust
----------------------------
Ladies and Gentlemen:
We have acted as counsel to Hersha Hospitality Trust, a Maryland real
estate investment trust (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission ("SEC") on March 1, 2004 (the "Registration Statement"), with respect
to the offer and sale of up to 2,816,460 common shares of beneficial interest,
par value $0.01 per share, of the Company (the "Common Shares") which may be
offered from time to time by the holder of the Series A preferred units of
limited partnership in Hersha Hospitality Limited Partnership, a Virginia
limited partnership (the "Operating Partnership"), which may be exchanged for
Common Shares at any time. You have requested our opinion regarding certain
U.S. federal income tax matters.
The Company owns, through the Operating Partnership, and its
subsidiary partnerships and limited liability companies (the "Subsidiary
Partnerships"), interests in 23 hotels and associated personal property (the
"Hotels"). One of the Subsidiary Partnerships, HT/CNL Metro Hotels, L.P., a
Delaware limited partnership (the "CNL JV"), is owned 33.333% by the Operating
Partnership and 66.667% by CNL Hospitality Partners, L.P., a Delaware limited
partnership. Another of the Subsidiary Partnerships, PRA Glastonbury, LLC, a
Delaware limited partnership (the "PRA Partnership"), is owned 40% by the
Operating Partnership and 60% by third parties. Another of the Subsidiary
Partnerships, Logan Hospitality Associates, LLC, a Massachusetts limited
liability company ("Logan"), is owned 55% by the Operating Partnership and 45%
by third parties. With respect to each of the other
Hersha Hospitality Trust
March 1, 2004
Page 2
Subsidiary Partnerships, Hersha Hospitality, LLC, a wholly owned subsidiary of
the Operating Partnership ("Hersha LLC"), is the general partner, and the
Operating Partnership is the limited partner. The Subsidiary Partnerships lease
(i) eight of the Hotels to HHM Leasehold Interests, Inc., a Delaware corporation
("HHM Leasehold"), (ii) 12 of the Hotels to 44 New England Management Company, a
Virginia corporation ("44 New England"), (iii) one of the Hotels to Hersha CNL
TRS, Inc., a Delaware corporation ("Hersha CNL TRS"), (iv) one of the Hotels to
Hersha PRA TRS, Inc., a Delaware corporation ("Hersha PRA TRS"), and (v) one of
the Hotels (the "Logan Hotel") to Revere Hotel Group, LLC, a Massachusetts
limited liability company ("Revere TRS" and, together with HHM Leasehold, 44 New
England, Hersha CNL TRS, and Hersha PRA TRS, the "TRS Lessees"). The operating
lease agreements between each TRS Lessee and the Subsidiary Partnerships
(collectively, the "Leases") are substantially similar. Hersha Hospitality
Management, L.P., a Pennsylvania limited partnership ("HHMLP"), owns a 99%
interest in HHM Leasehold, and the Operating Partnership owns the remaining 1%
interest. 44 New England is a wholly owned subsidiary of the Operating
Partnership, Hersha CNL TRS is a wholly owned subsidiary of the CNL JV, Hersha
PRA TRS is a wholly owned subsidiary of PRA Partnership, and Revere TRS is owned
99% by Logan and 1% by third parties. HHMLP operates and manages the Hotels
leased to the TRS Lessees pursuant to substantially similar management
agreements (the "Management Agreements") with the TRS Lessees.
In giving this opinion letter, we have examined the following
(collectively, the "Reviewed Documents"):
1. the Company's Amended and Restated Declaration of Trust, filed on
January 15, 1999 with the Department of Assessments and Taxation of
the State of Maryland (the "Declaration of Trust");
2. the Articles Supplementary to the Declaration of Trust setting forth
the terms of the Company's Series A Convertible Preferred Shares;
3. the Company's Bylaws;
4. the Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated January 26, 1999 (the "Operating
Partnership Agreement"), among the Company, as general partner, and
several limited partners;
5. the First Amendment to the Operating Partnership Agreement dated as of
December 31, 1999;
Hersha Hospitality Trust
March 1, 2004
Page 3
6. the Second Amendment to the Operating Partnership Agreement dated as
of April 21, 2003;
7. the partnership and limited liability company agreements governing the
Subsidiary Partnerships (other than Logan) (the "Subsidiary
Partnership Agreements");
8. the Registration Statement and the prospectus filed as a part of the
Registration Statement (the "Prospectus");
9. the Leases (other than the Lease for the Logan Hotel);
10. the Management Agreements (other than the Management Agreement for the
Logan Hotel);
11. the taxable REIT subsidiary elections for the TRS Lessees; and
12. such other documents or agreements as we have deemed necessary or
appropriate for purposes of this opinion.
In connection with the opinion rendered below, we have assumed, with
your consent, that:
1. each of the documents referred to above has genuine signatures, has
been duly authorized, executed, and delivered; is authentic, if an original, or
is accurate, if a copy; and has not been amended;
2. during its taxable year ending December 31, 2004 and future taxable
years, the representations contained in a certificate, dated the date hereof and
executed by a duly appointed officer of the Company (the "Officer's
Certificate"), will be true for such years;
3. the Company will not make any amendments to its organizational
documents, the Operating Partnership Agreement, or the Subsidiary Partnership
Agreements after the date of this opinion that would affect its qualification as
a real estate investment trust (a "REIT") for any taxable year;
4. the Operating Partnership and each Subsidiary Partnership will be
operated in accordance with the terms of the Operating Partnership Agreement and
the Subsidiary Partnership Agreement, as applicable, and in accordance with the
applicable law of the state of formation; and
Hersha Hospitality Trust
March 1, 2004
Page 4
5. all of the obligations imposed by or described in the Reviewed
Documents have been and will continue to be performed or satisfied in accordance
with their terms.
In connection with the opinion rendered below, we also have relied
upon the correctness of the factual representations contained in the Officer's
Certificate.
Based on the Reviewed Documents, the assumptions set forth above, the
representations set forth in the Officer's Certificate, and the factual matters
discussed in the Prospectus under the caption "Federal Income Tax Consequences
of Our Status as a REIT" (which is incorporated herein by reference), we are of
the opinion that:
(a) the Company qualified to be taxed as a REIT pursuant to sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"), for its taxable years ended December 31, 2000 through December 31,
2003, and the Company's organization and current and proposed method of
operation will enable it to continue to qualify as a REIT for its taxable
year ending December 31, 2004, and in the future; and
(b) the descriptions of the law and the legal conclusions contained
in the Prospectus under the caption "Federal Income Tax Consequences of Our
Status as a REIT" are correct in all material respects, and the discussion
thereunder fairly summarizes the federal income tax considerations that are
likely to be material to a holder of the Common Shares.
We will not review on a continuing basis the Company's compliance with
the documents or assumptions set forth above, or the representations set forth
in the Officer's Certificate. Accordingly, no assurance can be given that the
actual results of the Company's operations for any given taxable year will
satisfy the requirements for qualification and taxation as a REIT.
The foregoing opinion is based on current provisions of the Code and
the Treasury regulations thereunder (the "Regulations"), published
administrative interpretations thereof, and published court decisions. The
Internal Revenue Service has not issued Regulations or administrative
interpretations with respect to various provisions of the Code relating to REIT
qualification. No assurance can be given that the law will not change in a way
that will prevent the Company from qualifying as a REIT.
The foregoing opinion is limited to the U.S. federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
other country, or any state or locality. We
Hersha Hospitality Trust
March 1, 2004
Page 5
undertake no obligation to update the opinion expressed herein after the date of
this letter. This opinion letter is solely for the information and use of the
addressee and the holders of the Common Shares pursuant to the Prospectus
(except as provided in the next paragraph), and it speaks only as of the date
hereof. Except as provided in the next paragraph, this opinion letter may not
be distributed, relied upon for any purpose by any other person, quoted in whole
or in part or otherwise reproduced in any document, or filed with any
governmental agency without our express written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the references to Hunton & Williams
LLP under the captions "Federal Income Tax Consequences of Our Status as a REIT"
and "Legal Matters" in the Prospectus. In giving this consent, we do not admit
that we are in the category of persons whose consent is required by Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the SEC.
Very truly yours,
/s/ Hunton & Williams LLP
07796/01655