Blackstone to acquire 16 hotels from Hersha

A Blackstone Group LP affiliate has agreed to buy 16 hotels from Hersha Hospitality Trust for $217 million, adding properties in the US Northeast.

The transaction includes hotels in New York's Long Island, suburban Philadelphia, Connecticut and Rhode Island, according to a statement on Tuesday from Harrisburg, Pennsylvania-based Hersha. The company will record a gain of about $30 million. The deal is timed to "capitalize on private-equity interest in stabilized, select-service assets in suburban markets," Jay H. Shah, chief executive officer of the real estate investment trust, said in the statement. Blackstone, the world's largest alternative-asset firm, is buying hotel properties as the US lodging market recovers, while also taking advantage of the rebound to sell shares of older investments. The New York-based company is preparing initial public offerings of Hilton Worldwide Holdings Inc and Extended Stay America Inc, and is exploring a stock sale of La Quinta Inns & Suites.

Recent Blackstone purchases include the acquisition of the Motel 6 and Studio six budget chains for $1.9 billion last year, and a $1.3 billion deal for Apple REIT Six Inc, a hotel owner, that was completed in May.

The Hersha transaction, expected to close in the first quarter, includes hotels operating as Courtyard by Marriott, Residence Inn and Hampton Inn, according to a presentation on the REIT's website.

Including this deal, Hersha has sold 46 hotels for proceeds of about $460 million since 2008. The company is selling hotels that it considers to be outside its main business, while seeking to expand in Miami and on the West Coast.

Hersha shares rose 3.6 per cent, the most since March, to $5.71. They have increased 14 per cent this year.