HT - Earnings call transcript Q1 2022 | Hersha Hospitality Trust

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Operator

Hello, every one, and thank you for joining the Hersha Hospitality Trust First Quarter 2022 Earnings Conference Call. My name is Darius and I will be moderating your call today. [Operator Instructions.] I now have the pleasure of handing you over to Andrew Tamaccio, please go ahead, Andrew.

Andrew Tamaccio

Thank you, Darius, and good morning, everyone joining us today. Welcome to the Hersha Hospitality Trust First Quarter 2022 Conference Call. agreement based distributed first as yesterday announcement our be release, XXXX this will urban of was our which evening definitive call on portfolio. quarter the earnings morning's select Today's service sell to as well

company's be to positions. company's statements These Trust's company's financial Before forward-looking President factors factors today's Shah press or conference statements. known that With my are different begin. releases Operating the call Chief and actual other with and or and turn unknown well detailed that, considerably the may everyone call proceeding, Neil remind Neil, within to future that the over within contain to results, any Hersha may performance is you results, Mr. positions may now I'd the pleasure , financial as Hospitality SEC. Officer. forward-looking uncertainties cause it as filings like the involve These from to risks and performance

Neil Shah

Thank good morning, you, Andrew, and everyone.

me you Officer our And and Officer. our Chief you Financial morning Ashish thank Chief Executive are Joining all joining today's Parikh, of for call. Jay to Shah, this

where we for financial where in generating and portfolio, sharpening demonstrated results excited we great luxury been agreement select sell select definitive urban lifestyle approximately our or of By our have that are see signed a key. divesting to for opportunity today we urban portfolio, operational of on we to noncore service of our are announced noncore service quarter results New and focus excellent outside first our million as $XXX share seven properties York have proceeds growth. financial We gross $XXX,XXX per and

unlocked beginning believe and York, upside those tremendous our are we at strong assets. very in and recovery the a exposure retaining Additionally, see which of value New we to is

intend to ADR the result debt We provide use repayment. are for to corporate metrics operational from the service pro urban increasing forma sale portfolio, a proceeds select and As sale significantly we our of liquidity of significant RevPAR. our improving a the

X.Xx approximately urban select service to of consolidated $XXX to debt resulting which debt finally, addition to associated by $XX existing mortgage million our core eliminate through our In XXXX. debt to leverage to growing will ratio million financial forma continue we expect pro X.Xx. portfolio, in credit of flexibility And expect net will recast This provide reduce significant $XXX we facility, with million, the to portfolio. maturities

basis, own in increase a Following to will key the On completion will performance of portfolio's $XXX. approximately to United total key will RevPAR on destination increase based States. will we $XX,XXX. pro per transaction, the forma six XX $XXX, to ADR hotels and from from EBITDA across Total remaining the $XX,XXX this markets $XXX $XXX increase from XXXX

both surpassed $X.X of level this our we hold top gain into cash moving this transaction significantly and we entire Property in the and trend has profitability throughout Since the of most that March, April This expectations. portfolio year. the sequentially line million watermarks across excited internal Hersha When for very in January We high momentum flow took month pandemic. recovery profitable March, the posted onset XX forecast continued since on what the first about the our With expect onset are since further on outperformed statistics from our it pandemic. demand spoke in to to rapid $XX.X improved pointed last million indicators top In hotels time, that, of for to a and our through demand forward. line our I'll to turn has accelerating the recovery recovery the spring. all We quarter acceleration means quarter. the the and metrics. mid-February,

to rates, of Rate integrity the resulting successfully spike quarter. recovered Our our XXXX managers the the in close of growth January has as of driving one rapidly and compared first waned to executed for a demand quarter not ADR and on remained Based strategy revenue urban resorts prove the in Omicron XX.X% strong the performance our our but of to portfolio. to this year-to-date our recovery and believe key the for clusters, is only to throughout we from the ADRs lodging. industry continue improve high-quality recovery will sustainable, across year hallmarks

fruition to transient levels, XXXX encouraged recovery and gap business We group to come are gateway the occupancy in fully markets. before see to a RevPAR in even our has closing

RevPAR and with market with quarter. so While to coupled it's dramatic market of experienced in continued the resort improvement sequential in the second we throughout XX.X% relative quarter, in XXXX. projected we are the of focus to again, on improving move for provides urban a have XXXX. into operating increase EBITDA, quarter prior growth resort of March, seeing our portfolio growth XX% project growth first to portfolio occupancy far in $XX.X and portfolio the rapidly RevPAR trajectory clear we of seen The generated Shifting approximately shy performance quarter markets just gateway XX% second higher the quarter growth in demand The XX% our we the our performance. a continued push robust of we million first Once our quarter here. growth have that a from our for as April, will the demand environment

fourth the in demand asset and Hotel best-performing Key from first once Villas $X.X quarter growth was by period pricing in a again a record unprecedented quarter of Parrot benefited the Miami West the RevPAR, properties for Our quarter, and Key to increase a same during the RevPAR occupancy RevPAR market. XX.X% Florida our South perspective power the EBITDA million Key for and $XXX as and from The XXX% and average the in property in $XXX generated daily rate XXXXs Parrot XXXX. XX%. surpassed resulted a which

million first of its The million; producing a best performance quarter ever, as strength We first through throughout and XXXX another to EBITDA Parrot of rounded growth the quarter with Beach quarter quarter out generating increase at XXXX. first XX% and ever, Cadillac in continued to this Coconut generated continued quarter $X.X April in first outperformance Grove had record-setting Miami XX% the XXXX. increase have Key turned quarter expect seen the the and The EBITDA, market great XXXX. its of quarter the the through XX.X% $X.X RevPAR compared Ritz-Carlton best

We the related of California, to expect cryptocurrency to continues an well-located, of market. more throughout markets the for business momentum same than uptick posted by to open South the also notable traveler, clear office of offerings, but increase an by the in period Florida Sanctuary differentiated power compared tech, Xx posting the space XXXX. new moving The Beach leading see finance very the driven in pricing future influx XXXX. have companies $XXX,XXX to a the strong ADR only of travel Resort to In XX% to high-quality in that to relocated not Sanctuary EBITDA Miami $XXX and of traditional forward, to growth the XX.X% of the XXXX, increase quarter, RevPAR demonstrate the quarter; for leisure

our to markets. Turning gateway urban

of We the are which return seeing will the markets. only strong early of demand leg in gateway growth even be its in urban demand recovery travel of next with stages, business

there prior pronounced more know, conferences we Omicron. than earnings the seen today data and most has quarters our are XXXX. and it suggest growth at been person, companies the And mentioned portfolio, and has taking office, returning we've I TSA is onset core markets. pandemic. traveling are of More highest all to while been more impacted Delta in As are earlier the sequential But in since Americans due disrupted momentum urban has urban place rate the demand entire then in air airline via the since acceleration positively to our

that impacted While by we occupancy continues maintained pricing were severely most have Omicron. to across the recover, power markets

X.X% and $XXX which than The ADR The down of to include the driven XXXX. Hotel, which XXXX. ADR Notable XX% $XXX, Rittenhouse $XXX, $XXX, for compared was RevPAR in rate up March our down of hotel continued with Philadelphia, only in at Ritz-Carlton drove at by to XXXX. X.X% of of Boston, portfolio, is urban only $XXX $XXX two March Boston XX.X% ADR month urban the at XXXX an $XXX of The with above ADR March Manhattan, strength XXXX first of X.X% ADR performers closed was an and for Envoy increase The X% Union where XX% generated $XX. an higher to strength March Georgetown, the weeks was Hyatt flat about just which of of of weeks. ahead Our X% the XXXX. two an Square, last below

to business build the of for similar incrementally urban at of Philadelphia to and recovery, they return than employees has been with managers continued drivers the experienced the traveling XX.X% April travel the growth first growth, U.S. with All largest of quarter. our grown have had D.C. Manhattan XX% growth though Omicron. reported In into sequential expected urban SAP, from XX% after severe a XX.X% is March have impact more a the and has travel half According fashion Washington, February. in RevPAR growth, growth. demand markets to of

January what of U.S. transient average. of our trend said of the months, XX% New our March. has for both travel to XX% in predicting the occurred seeing for we majority on-the-books increase occupancy managers mid-April. their the In in on an spend to matches by increase will business business travel where addition, and York, from XX% This reduction the ground, QX XX travel next are In group improved on

recovery EBITDA and assembled replacement being gap. will market While clear view highly been uniquely this improvement our the urban to all valuation private will and significantly assets continued evaluate of improvement and close performance up, skyrocket, to believe discounted standpoint, market and consistent. in as be travel our strategic provides trajectory portfolio and any skilled our values to public From of clear management that It for to That growth a there a portfolio. through values We deliberately public continue value production. to private continues to close accelerate has still for is portfolio. continued cycle-tested ground business team our continues Hersha's is to market rapid positioned the this said, opportunities make our and this our gap

value turn discuss to While of With parts using financial offers financial this can that recovery the stages me in of the early cycle. greatest to we where our focus detail flexibility the Ash recent outlook. the performance let and in on to over add it more that, portfolio transaction the our

Ashish Parikh

and morning, for Neil, of after transaction Thanks, recently to leave everyone. remarks. our prepared questions announced my good on sure I'll plenty time be Great.

first an closing outlook and quarter. my for update accelerating cash we on and before rapid flow, and the So, across current witnessed will its margins on portfolio as progressed our quarter sheet with impact balance comments on the focus our the our demand improvement

As was down comparable RevPAR for compared store to month. XXXX, the our January XX.X%

half February the of and deficit year. driven quarter This of demand and seasonal of urban to corporate spreads year, XX.X% cash $XX softest performance us flow flow first during the we're generate portfolio, since the our board. With rate leisure-oriented cash pandemic. entirety extremely exceeding lowest the demand of our strong our of by we the March quarter, into to with across hotels and quarter the the March year reduced portfolio, in Due flow cash onset the during for of resurgence typically the performance. flow first level was significantly of the XX.X% respectively, to forecasted impacted million back our The property recovery of the a of was of pleased that $X to demand corporate million positive the the at cash loss XX.X% properties and the strength pandemic. first the of the comparable generation margins the also drive at the quarter with by the quarter XXXX ADR nature and our allowed the our slowest by Coming ability approximately for is

our type ADR to EBITDA integrity basis quarter growth and quarter The focus management stringent along resulted first occupancies of respectively; XX.X% material at as conjunction controls margin well. XXX generation better rate in in are respectively; flow expense and XXXX, March margin resulted as we this XX.X%, comparable and incremental in cost growth our points for initiatives Our savings expansion margins than on hotels EBITDA and and margins and XX.X% GOP of with witnessing at April drive XX.X%, March in the higher with GOP for XXXX. cash in and than performance the in roughly ability both asset and month initiatives in of our came

Robust a quarter the cluster X,XXX EBITDA generated the basis portfolio also basis Our Sanctuary points in than with South Santa Parrot EBITDA with seen were Cadillac by drive basis XXXX Florida again margin generated California the Ritz-Carlton a XX.X% X,XXX that margin, exceeding at a XX.X% highlighted results same margin, points. finished XXXX, to quarter Coconut for this XX.X% margins the our Beach Milo EBITDA our resort in X,XXX more Parrot first EBITDA first quarter led Key and by Resort the Grove. point Key, above margins EBITDA quarter Hotel both XXXX The than our period. and margin, Cadillac as while Barbara the to were more increase Monterey

As greater we our XXXX. than margin the to profitability. began XXX into Envoy Union lifestyle and March, progressed points growth many increased luxury Ritz-Carlton posting Boston EBITDA and also Georgetown, urban Square, of higher include Hyatt Notable basis each drive performers than assets

On have traded EBITDA flexibility. selected a basis, of came in course our the X.X% to hotel below quarter the operational XXXX a portfolio levels. just same-store we Over has first as maintain strategically assets undergone transformation pandemic,

recover, than one As quarters to to year. our the less second spread the X% profitable to reduce most we demand of to quarter, in expect of XXXX continues traditionally the

our EBITDA our and strategic recover and the transformative net presented rationale $XXX clearly recent and fortifies our for down of recovers. and company. second Our to sheet before this is Neil back outlook on remarks portfolio levels performance on to clearly quarter. our controls, for the and out. $XXX play transaction RevPAR to debt our million pandemic will few seeing pay And million that is our through our for A balance also balance between ability rate fully sheet closing based dynamic this view integrity cost XXXX outlook

presentation reduce unsecured We close debt facility The the are covenant rationale and Transitioning outlook. to expense proceeds refinancing credit with line our and anticipate group are second April, March. credit leverage out two of notes with financial supplemental on paydowns we nearly will our today. from paying metrics. top improve is also down reduce unsecured our and in on and now that approximately our by and contact interest earlier our clearly the we've to sales leverage paydowns bank asset majority website. portfolio. growth to our our revolving expected forecasted are in our detailed increase seen laid continued and Month-to-date of XX% impact RevPAR the notes significantly our turns from our across the announced The quarter metrics in is

our once the will and operational across unprecedented have largest which XX%. level, share of second our trends and Although to acceleration and March pursuing the highest revenue, performance prior Each accretive RevPAR portfolios run, South largest actualize entire value available these the outperformances markets set resort our further is Florida the while continue a D.C. other on been it this forecast quarter. transformative XX% and their of transaction, Washington, to the projected we're at again outperforming of continuation and surpass and become urban that produce during months outpace and portfolio Boston. portfolio. is laser-focused the forecasting The from we highlight Manhattan, that of to throughout sights to XX% the portfolio by With cycle on recovery, occupancy opportunities remain already our today's begun has the are

with any my that we're And So, address may the questions you portion concludes that, happy of call. have. Operator? that to

Operator

go Please ahead, Instructions.] Our Dori first Dori [Operator question from Kesten. you. comes Thank

Dori Kesten

to QX then Hi, being Pacific, today's On what on thanks, Can talked otherwise opportunistic between about your you happened good sale and morning. Pan call, marketing Congratulations. you announcement? detail sales. but

Neil Shah

Dori. Sure,

now the we as are for flexibility, asset look, we create active more always in looking dispositions to several have financial at We And in and order sales been acquisitions continue we years. market. very do, to

achieve -- we -- strong at We last on were in part at spoke announced not that and this say remember, asset We've York that today. to asset be venture talked some we transaction to value there hotels assets transaction portfolio about hotels our reduce the sold drove to Pacific like felt we the close we like It's debt. pricing the end And time spoke well. now, to South about of this very today in call, as six those the QX guess, for felt able we the a and joint early this we year. But New past getting year, ones net our additional to towards the But in You'll Seattle. company best of we've the spoken be right the sales, I in Pan won't about about the including opportunity that past. was Boston. for

Dori Kesten

call expect you're I your you And what that And we changes Neil. was the Okay, wondering pushing maturity? facility. on just to credit close out recasting the mentioned beyond should

Ashish Parikh

think, this Dori, is I Ashish.

So we Number But continue period. with the period conversations we've current we looking are covenants one, being Clearly, set, of the of clearing a is covenant, pushing in maturity. for different by we're we waiver recovery will anticipating structure second bank covenant -- had our the ways and as right be out group. the to out even way now, of it lot covenants our our through this are current still the quarter. end

think I more flexibility be will and on of just So, covenants extension it maturities. some

Dori Kesten

thank Okay, you.

Operator

Oppenheimer. comes Please question Batory next Tyler. Our go ahead, Tyler from from

Tyler Batory

for Good my questions. morning, thanks taking

on of stands side City. exposure positives. of things, the one to out lot to asset for be sales that the certainly, a York of But one is First the New me increased going things

market? that recovery? So, Manhattan York talk conviction the you New us of remind your think competitive just little terms and you in those City the And your maybe a assets differentiation advantage of just about exposure, the bit or level with could have comfort in terms in

Neil Shah

Tyler. Sure,

those New lodging unlocked and amount and to see tremendous of value in in for the City York market the recovery potential believe upside a assets. continue We prospects long-term

years. the -- the as We've and we in of for on that benefits mature from But provide seen highest markets all New stabilized capital market week both starting to transactions lot every New as least ground to for York we're markets. a so the mentioned in the just of active. I market performance that a several buyers see the a as We really we City things. not haven't of some York, growth would among in it's or lot at international the us, of say -- York, of But country, New other really get calls combination accelerate. the in currently next prior But -- the the expect that's have

are So, New to for York. not say sell are we to ramp-up that future, hotels New is won't long we York, we strong pretty on in happy New the It's the coming the bullish in that felt but performance very we expect on York. we be quarters, today, so like

Tyler Batory

a leisure might things we some a back? slowing how for at of summer, you And sustainability I think little you just Great. could right seeing rates pricing on kind think or of key the move a the through indication a strong from as that on that the growth. hearing investors levels with side of of of But sounds these any could, corporate and is strength rate be lot as travel follow-up, beyond. your into the QX, April Okay. commentary that one just And of in comes perhaps very little demonstrated about strong clearly, net long The you bit. ADR a talk we're very if more, remain how bit terms growth? optimistic And rate are power. the perspective positive now Do a be -- just in down as the strong can you then of focuses that we

Ashish Parikh

up this occupancies at much far it our peak go, Tyler, staffed margins we're which rates. very the way Yes. resorts as at high at looking and time, achieving fully as pretty are is we're

changed -- So, the with those still occupancy we are desk managers have has we and these general front Most is on about in our That At believe housekeeping points properties, rate that than we the to on really, going that do that by are bellmen, solved labor sustainable. urban variable the to margins XXXX. at and the there. think back. add were easily and have fixed back gets desk integrity we managers, everything front we of attended. others the below operational model X,XXX basis the labor, And maybe coming we are be that occupancies resorts, property more now

a runs you markets in long urban XXs generally in go. to mid-XXs anywhere the our is know, portfolio which these still occupancy XXs, but in from to and As we're way strong,

So, really QX in that we with RevPAR now anywhere believe on XXXX, to off X% additional is from these or getting urban market to from to X% even our markets which exceed drive probably which pricing, going is to is QX, XXXX occupancy, be in further. urban margins ADRs going

margins sustainable. are very margin So, going we sustainable feel that forward. The growth the is

Tyler Batory

the Okay, you. details. appreciate great. Definitely Thank

Operator

Our is next from Could we comes Jefferies. Katz go from David David. open. now questions, David? line David, Please ahead, question your your taking call

David Katz

and the Apologize, my to really focus, of sort of a your midweek to talk like portfolio? stages. remaining you'll back just go of and portion it, capitalized about recovery New one that's continue expect see second, wanted remaining -- it's the years, I'd how just portfolio that well spending travel personally, is you it on more, And But may, questions. see and/or thanks do from we on evolving, in you portion the for And if and what that call business there? two you capital a thoughts feel very one, how early hear taking I York I be we evolving. more love the

Neil Shah

David. Sure,

several in well as second of getting looking now other that We're your last midweek we're urban conventions occupancy markets. but of in our the is XX% the kind to weekends to the you April touched this and we've turn. mid-week midweek like the XX%, comment, Ash just were impressive that so major in as level next up really as in driving ADRs from Remember, in And months. months. point just grow get this performance. was is XX% are without what three, today Leisure New getting our will and XX%, compression. But remarkable several markets across continue performance seen on as four to is likely on York because quarters, clearly driving it ADR the that these performance weekend without Just well,

cities going be So, drive New are able to very of our York particularly back is and to meaningful growth expectation like that year. urban through RevPAR the this markets half

in is good New as in backdrop, to with portfolio accelerating, own Performance a we're New hitting Our York, that and York. a is properties it time an inflection.

As you know, our New York resilient. pandemic portfolio was even through relatively this

are Our very nonunion operate only but that portfolio returns, purpose-built and hotels of New hotels can guest lean drive levels great not you York in financial satisfaction. high

Our and our drive able developing, are service and nearly to decades New of of advantage this York They hotels. for with buying, managing are in and real a New mix are we're in experience, in clustered two New lifestyle hotels select in York. hotels advantage, City luxury market York building,

two three in to couple years EBITDA portfolio-level require that that forward, that look of to looking next the hotels capital additional rates; we for at criteria that drive hotels there's assets. recycling As growth the fit would

own properties in international four in as the how the has we absolutely many to where two to where But back of the think depending half So, future. towards hotels capital marketplace, in additional today, the kind the back New market the pricing to York get is, I on York. come great New time it's is, we a year, sell could of

showing and in is high New great shown today York growth. portfolio Our really has resiliency

David Katz

year that Portfolio to quick just wide, may And any is it. follow-up. that this deferred need there should contemplate sort or we up one next be caught Got year. CapEx of

Ashish Parikh

we have horizon David, CapEx don't for the year. any this on significant

seven-year that usually which they're But have do, don't any I to few years, wall, what spent Safety we have of to the CapEx. money we levels will projects, been couple really of that to like think a more preventative renovations. restricted XXXX we consider kind we've prior things more CapEx to feel are five much in so maintenance, like hotels starving our normal of vinyl, year, the XXXX that our next anything and in For but be back carpets, three or deferred and we Life of primarily more extensive that or we'd refresh CapEx last the way has

David Katz

great. much. sounds very Okay, Thanks

Operator

Our from from next ahead, Baird. Bellisario go Michael Please question comes Michael.

now is line open. Your

Michael Bellisario

morning, everyone. Thanks, good

in of first take Just two what ago out of realized going on where to you is to to or sort back? the side? the anything, first expense were question and for Ashish, labor if fixed is a on to saw occupancy your point, the the fundamental the about you you. back savings it comes kind what Could follow-up quarter, talk side, variable left, variable Or as really coming be questions

Ashish Parikh

well at Michael, range, XX% Yes. about the were the occupancy this component range. but ran into into because portfolio really QX, we XX-plus point, resorts variable the the it's in almost of percent XX% so the

wage mean, No labor doubt I much a and come year. at properties. variable still the getting challenge. more of through the more returning seeing people growth people are of workforce. that. couple that last we for the and aren't And wage over But seeing back will and positions, to else about challenge are the people seeing type getting the we or we've those seen not the we years, a pressures applying that So, to of there's remainder needs that really be remains

occupancies the the urban mentioned, still on were low QX. in that's the -- I positive -- The So on our as side. market, in

some breakfast assets. We least. year the mid-February of expense select at on in some amenities of service and continued at hotels remainder of post occupancy restaffing the changing to don't we see coming into March, housekeeping additional the this large plan on are We but bar kind increases for protocols

we're to to just to our up, continue to So, rooms. really it's from the go bring as service standpoint, people to back going occupancies more be need going

Michael Bellisario

from insurance, Got of these utilities, you forma basis? going a think rate material anything pending for ramp other sort like it. property pro the the change outlook And sale how up the affect on then about things taxes, sales growth asset expenses, to do that, the and

Ashish Parikh

and assessments property -- results Not last a few We're seeing operating lot which years. did reductions, see we of no. on so based tax the much, over are

change. that should not So

I think our it go what market where getting firmer and property insurance point we a quotes insurance, summer. and We're to stabilized. the now would back renew has I certainly come look to say, to has casualty this as

same So, due last still that insurance that and other wildfires to going I at be think hurricanes, to that growth to hit not in over five continue be the we've will years. there events markets, seen the but catastrophic to three it's expense levels

Michael Bellisario

I'm not on That's clarification then it. sure Got a the of proceeds. use I correctly. helpful. it And heard

of where off the You're proceeds? term of did in Goldman the note And loans. the line two stand use credit, going pay to the then

Ashish Parikh

we right through working that now. Michael, Sure. all of are

desire is of notes -- part least But Goldman the will to majority we be at nodes. anticipate paid will down of a corporate pay a the at kind off reworking and like facility. Our minimum, negotiation would our this of parcel be of these with proceeds. Goldman all We credit and the

of position losses dividend. a on have potential there can may of some -- to but this capital that other We gain do The potentially the have transaction. sort uses is at to we we special how net is those, we'll pay a be a capital in year-end, operating because big we see offset

Michael Bellisario

obviously, one early year me. It's further allocation Or wave now? in a it. to second down a you some there's capital last at acquisitions? but or at is this maybe hinted maybe Got later X, completed? the for position second early, still And front, be you you Where probably Does the road steps, after going on dispositions put months next year. yourself dispositions looking of start XX the see point from might next you've of think as about just -- do this then wave that that

Neil Shah

have transact on when just Mike, assets growth for our if the that trading marketplace is with know would from We're at look we drive of this year existing core close EBITDA great to this private we driving Mike, right And which we're If year, execute different we're where to recovery is can next But then the asset portfolio to drive and definitely continue that also acquisition to to value will at on on and ahead. versus the Neil. as try that that very going still assets, that. see at we values volatile. staying close market NAV. from gap very now, opportunities would a focused points means leg attractive our the very -- very sales or will well. across we company world

flexibility So, to take ability continue to have we're the the so our gap. of increasing financial grow advantage close as our opportunities that as portfolio we well to

Michael Bellisario

you. thank Understood,

Operator

go question next Raymond Crow from ahead. James. comes Bill, from Our please Bill

Bill Crow

quick the Hi, down guys. then was need? good us. details. And questions what this all you seen for sold over portfolio some did this unencumbered prepare and wondering, I'm bullets six And the then contracts? just coming paths But we've debt go by other months two liquidity morning, Obviously, management at last to

Ashish Parikh

on the start let this. me Bill, Yes. financing with

did at the we addition in very refinancing volatility of to choice a those quick down of CMBS to sort transaction. So, We wanted options. pursue was we clear in kind this led an made looked few that, markets debt, inbound more at the go looking our that markets markets. all utilizing another to of transaction of and inquiry those This refi that just

over last on So, bank our to with working very have just working in we have the well, addition those as been fruitful. conversations been six group months this. And

best at continue We So, was felt pursue. various this we one the options. to to look like

Bill Crow

portfolios noncore? shopped the there were other that were alongside urban Ashish,

Neil Shah

lot see are sense the months We York it a on in been some active New lots dialogue hotels, didn't made hotels spend -- for of eight like we New Bill, not pricing we've last six of felt We where yet. having on time to we portfolios. York

players months, of hope about where private to to talking that close inbound around the a last decisions the was make been and the some to there a We but kind South we lodging of as in committed space we've difference that and least portfolio. on continue to market And it this And that is year. could there years. of is making quiet gap. able execute to executing big between public -- then at And the several our major even. for and venture we'll point be here decisions transaction and values sold with -- pretty across the of gap kind think all to spend on just a That's two And at close process on an this market But we'll way or pretty a thorough our this are great continue trading continue all started is to management our I across very that look environment. in portfolio was trading, And acting single unencumbered. hotels of time ALS. joint are three the in the the of this on some us execute Board a our Boston to at assets one in team values and

Bill Crow

I on that to deal just quick. sure. the have No. If to you're could these put for or there is Congratulations years. going over I three the the And Are ask with the company any of work? penalty that two, details reduce two last penalties there the real size number to then pricing Yes. deal mean, an prepayment proceeds as you G&A? opportunity to you cut dramatically

I and shrink kind really G&A. G&A range I'm incentives think restricted we're same still -- company still any between AFFO, in away or stock tricking takes just in cash And that you if flow-through that the stock without you're to of up XXXX. you're

Ashish Parikh

Let Bill. of me the take part that, first

the portfolio CMBS the buyer. So, anticipate we there are by no any We had the prepayment would do penalties one a assumed debt on that be level. of loan on

cost no of or and of there either. nothing kind repayment any on penalties the So, management kind any termination

So, from of that it. side

Neil Shah

with the business. growth and to G&A, where a and yes, moderately stay other able on share value the size short G&A our as Bill, And optimize G&A as be through enterprise increased we'll EV existing either through with as have to just the business. we term, will costs right percentage of the -- as well -- ways remaining to in trading we're time, over this But side, will G&A our of the

XX% cut to remember, about XX% we think you'll I of pandemic. our G&A across the

if at to It wouldn't it's sure not that sense. I'm make doesn't level as the same seem XXXX. So, --

depend sensitive to we levels, So, very to and we're don't we on it we our I but is it where on going -- at value outlier. enterprise But it, will be does think an are focused I think but it's frankly, be think marked. similar

Bill Crow

the for right, All color. thanks

Operator

question go next Klein Aryeh. comes ahead, Our from from Hersha. Please Aryeh

Aryeh Klein

can Good so? six the day, about all. From BMO. transaction or of values Maybe process, on three the to over you properties the months the may how last or talk have changed those and back

Neil Shah

flow forward months, the actually as pretty across from very moved producing increased their hand, had very some little to on attractive a cash basis, across values one year six last On flow. that have definitely cash last increased significantly we've cash has because the markets now flow

pricing. helped that's So

think and more rate markets just late been peaking kind post and interest the widened Russian then definitely rates since fear just debt I some credit last interest and of market. taking invasion inflation of of discussion much have the year, around has center volatile the kind prints the

can to have that except So, it, transact many on folks managers in that that these credit, around for it's there days. of do there's future, and asset little debt that are flexibility large part a less today, the the which put it just then and expensive more of

just just than we're Is recovery that question? of your kind mixed, -- in significantly -- So, definitely that a but place the six months answer ago net-net, it's profile. there's in does because higher different

Aryeh Klein

what with to more any pool broadly? inflation I seen way, find we've in and buyer Yes. the guess maybe freights follow-up as that. given going Has on a

Neil Shah

the I I have mean it's to there's the availability. different we've -- in other to because more debt it in quarter pricing before down don't we'll number of and transactions financing. whole gotten the folks something much we think than see participants without I and And place impacts -- where it's flow. debt more a I take just the fewer hand, second mean many can recovery going had there and really. slow are that might But first cash think so on

So, XX accelerate the days through the cash this to across or tough I expect last a I transaction think think we've continue flow as this market most transaction XX time market in gone year. XX days. to But definitely to accelerates

Aryeh Klein

York, New optimism market it. of reason now, presume transaction part lot necessarily And Got and of a I it then the on the like sales that's New outside the of hotels City. that York but there's for the reflect seems doesn't that of right

get So be? to valuations levels, out? those and think want out to as back to it's far does do something need really change you proving valuations just else getting Or where to pre-COVID the them as back playing recovery you to

Neil Shah

little recovery the the markets is just significantly. -- really, makes been or There's to it's better bit debt been they've ever a better demand the think of definitely volatility simply playing do three micro they've but are stuff, much is growing the market environment, the I macro much in it and and lower choppier, and out than supply less last the four pretty supply. years. fundamentals than The pipeline

seeing willing take the aging meeting buyers. are -- these the bigger kinds not But of not high-quality, quarters because on assets, that transactions value New It's the a the New obsolescence in seeing of order It's and gets not hotels sellers built transactions the not there's at marketplace much you're pricing York. of there's like next level, we boxes sellers newly they're on we expect a XX% see in not price. bleeding. to built, to more like sellers -- York, assets once where more hotels across risk just lower in own you real the quality several purpose trading But we So, many about are kinds so to discount minds. in to And have, stop they're would where bleeding. like today's

to that transaction of will I we -- rate market really probably seeing not and New of back higher transaction where until this And by will year. we're be York. significant we're that's expect just likely, a picture couple But values margin the end you're ADR York. peak prior trade towards it seeing get or the develop in kind we'll of just very sure, probably in supply those next where seeing gets the so, New from And do the think years, And -- it's across we there. for

Aryeh Klein

Thanks. me. for all that’s it, Got

Operator

Deutsche from Please Woronka go Chris Bank. from ahead, is question next The Chris.

open. now is line Your

Chris Woronka

sales more future. it does, morning, announced My of Obviously, EBITDA kind you've away strategic some is one you've in Yes, get the takes which selling it potentially the point to some base. Bill's pricing today, about the makes rationale, And follow-up talked question, totally assets question hey, with the guys. is your Good asset guys. at things of from sense. a

that and the somewhat the So, you question you're and market about closing and at some levels of there EBITDA bucket that is cap getting perceived or are such. is refill that you of liquidity confident maybe how trading of EBITDA kind to to -- -- kind is kind point, can -- -- NAV gap

So you possibly solve think puzzle? can that how you do

Neil Shah

like but it's it's need at a we question, to puzzle the We time. gap with just trying step feel a just don't something We're NAV. good definitely that take we that to Chris, one solve yet. just close

portfolio, relative we can and to strategically It in assets of makes and if the assets terms fundamentals sense growth required in makes rest supply-demand the plans that achieve their profile NAV of to capital those sense. strategically business markets. sell to they?re just our say across So, when rate close their years several I

decisions, opportunities to acquisition right time continue we opportunities. And at committed and value driving to transaction, we'll look we'll look here. like, disposition with the and just have shareholder flexibility to -- We're Just the believe. this we'll where make see the

Chris Woronka

seeing hotels guys Okay. the and getting you on employee kind in your to the may Fair are also staff in just have any seeing come increased staff urban enough. And as up? other of -- competing folks away particularly as maybe you markets, back side, are of looking the of then some turnover up that are bid and you

Ashish Parikh

resources hotels competitive we're hotels. into we it we very think open seeing mean in our very, with people now. a stabilization I recruiting I more spend time so actually. and that continue are of market a the Most and lot is for compete little Chris, employees, still a of to

actually I So, same this but of retention effectively everybody at right the turnover we are guess longer duration less time. now, is playing employee seeing a and game

Chris Woronka

you. thank Okay,

Operator

Anthony, from is Barclays. ahead. question from Powell please next Our Anthony go

Anthony Powell

Good morning, guys.

of hotels You've travel most seeing markets, travel you're how across about most urban but weighted. of are return business your talked business your our selling

versus So, to it think relative that want I'm leisure and take now you what you to do is pre-pandemic going your do forward? pro mix forma where business curious where was customer

Neil Shah

pre-pandemic, describe it transient think XX/XX business to leisure. and used as we I between

what was the working. leisure pandemic, was obviously, During

our So, of during income was XX% -- during XXXX. probably it the

small business As in the It's by business lifestyle and coming the transient. in April, do group or meetings we the and that's Boston, which same that's Ritz-Carlton in Boston, and are believe higher-priced we're leisure. $XXX a we'll the above at business in non-New and New driven both being neighborhood, of to We all we going that of probably to hotels our select focused. Georgetown go hotels, also hit gateway on to urban the our what selling continue and in And really transient new which a Washington Hotel are back ADR. really highly Boxer York. into continue ADR; And luxury urban have And is XXXX, strength the we just markets. of be at midweek transient we'll on well performance to Philadelphia whole with Envoy record lot on Rittenhouse customers Hotel But back. have expecting that significant York these we're business in drive seeing the now long-term is

of well. So, and the urban side the still business alive is

XX/XX, a how here But out we luxury -- maybe the in XX our would just on in like that's from recovery during really next we the are just business-oriented coming and it traveler, urban and this XX% to will didn't at be portfolio you ahead. really months number markets week, in what's the back. yet. hard hotels plays to depends coming It give lifestyle if business maybe transient, I post think business -- maybe net-net, year there, all transient change it and if

driving that was then coming during the high-price of we're urban customer. will likely leisure traveler in They across Just business price markets become business-oriented. And little year. pandemic, more it weren't wasn't the a That will switch the some our taker; the that customer. the the business

Anthony Powell

Yes.

clear, it you think ? pre-pandemic, be So, to it was XX/XX XX/XX and becomes leisure business

Neil Shah

of XX/XX. Kind

Anthony Powell

XX/XX, XXXX? isn't leisure its in

Neil Shah

hate I?d that Grove, like now, because Yes. the lot it you quote a example. ways. just Ritz you take doing hotel could business in an that know for been leisure. we right Business of I as take we're don't of a is Coconut Like a have let's doing -- lot But leisure to

And the hotel coming year, business so, across that will more much become driven.

South to even going leisure it's a like little so, bit segment Florida. in reduce the market And a of

No, bit they to number. too, in the we're about versus hesitant little But transient a was that's give Ash, it, So XX% an ? say that's like why just I future if XX%. I asking, like to it's business how think Jay, it's would pre-pandemic -- XX% exact

Jay Shah

urban think I kind travel, I urban Yes. that of exposure is be the is There'll BT. it where and happening. the significant couple to years mean very we out difficult. business still next from leisure fact across is going to plot transient across by business through exposure. I the really some sort the benefit mean, of recovery. driven And news stabilization it's But is of displacement that have the consistent good rate

it there exactly expect that where it's as to don't know hard rate to So, we disruption, will stabilize. happens, but be

more point but longer to BT, it's be by get XXXX, Neil's term. see to is going the time stabilize going we're going not we're think probably where I to we to

Anthony Powell

back, says seeming increase is REIT BT lodging none BT almost their every but because mix. asking that I'm coming to

else to more done? over the has at hotels run, be your BT like leisure as curious, I'm portfolio long looking you refill you So, going are oriented or everyone

Neil Shah

you great say. -- to and order resource we're create And XXX% very depends in to lead need really our value and We're at urban what we've of we very likely, returns. It know. hard the to -- and opportunities, and capabilities to be more not I'm kind on but value you we And us never value. been not set follow don't sure. we're about drives disciplined really likely on just hotel that can pricing. are folks. pricing. we believe It's opportunity But pricing It herd never depends looking not will creation, the where drive

Operator

to to remarks. the management questions. going it there's team for final appears back further no It hand I'm

Neil Shah

we more your very again and know we're you you, time, that say for you With thank we'll all any anyone for But Well, Thank let standing and that much available by questions, questions thanks everyone. just obviously. follow-ups today all for throughout are the no all has. time. day any

Operator

Thank lovely day, call. disconnect lines today's concludes your a can you joining. and This for you Have now.

Hersha Hospitality Trust (HT) 28 Apr 222022 Q1 Earnings call transcript