Article Excerpt:
TWST: What is Hersha Hospitality Trust?Mr. Parikh: Hersha Hospitality Trust is a real estate investment trust focused on the upscale and mid-scale lodging sector. The company went public in 1999. We did a small equity raise and the goal was, of course, to grow the company over time. The REIT equity markets went into a moratorium from about 1999 until early 2003 due to the recession and the terrorist activities in 2001. During that time period, however, we were able to grow the company without significantly increasing our equity base and we strategically positioned ourselves such that when the markets did come back, we were able to grow very rapidly. Some of the milestone events include a private placement of equity and joint venture we entered into with CNL Hospitality in early 2003. That gave us wide recognition as well as a strong equity partner. We did a follow-on equity offering in October 2003 and recapitalized the company. We raised our market capitalization by over 400% in doing that raise. Since that time period, we have done a follow-on equity raise in 2004 and a preferred equity raise in 2005 such that we currently have an enterprise value of approximately $600 million and we are forecasting a total asset base, including all of our interests in joint ventures, of approximately $750 million by the end of 2005. We have seen significant growth in our portfolio and in our infrastructure since the time that we went public in 1999.
TWST: Give us the comparatives on this segment of the industry versus
some of the others, the apartment industry, the residential industry,
industrial, etc.
Mr. Parikh: The biggest differentiating factor between lodging and most
of the other REIT segments is that there really is no guarantee of lease
streams and lease payments as there are in many of other REIT sectors.
As you know, hotels are very much an operating business with a
fundamental real estate base attached to them. Lodging REITs inherently
have higher risk attached to them and can see additional volatility due
to economic and geo-political fluctuations. However, lodging REITs have
inherently higher growth potential in periods of economic growth and are
one of the few sectors today that continue to have significant upside
potential. I think if you look at the other REIT sectors, there is an
overall feeling in the market that there are somewhat limited growth
prospects for the near term and that most of the growth is already
accounted for in their current pricing.
Tickers included in this excerpt: HT
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