KSL to Take Hersha Hospitality Private in $1.4 Billion Deal
Skift Take
- DJIA gained 213 points, Nasdaq increased by 114 points, and S&P 500 rose 28 points; 10-year treasury yield decreased by 0.03 to 4.21%. Lodging stocks surged on Hersha Hospitality buyout news, particularly REITs: HT up 56%, BHR up 16%, AHT up 10%, others up 6% each, while AINC traded down -9%.
- Hersha Hospitality Trust and KSL Capital Partners will merge in an all-cash deal worth $1.4 billion, where common shareholders receive $10.00 per share and preferred shareholders receive varying amounts based on their holdings. The merger aims to close in Q4 2023, leading to a rally in hotel REIT stocks.
- Major US and Chinese hotel groups have strengthened post-pandemic, while Europe lags behind. Marriott, Jin Jiang, and Hilton lead the world hotel ranking, with only one European representative (Accor). US has six companies in top 10, China has three, and Spanish companies see shifts in their rankings.
The DJIA rose 213 points while Nasdaq was up 114, the S&P 500 was up 28 points, and the 10-year treasury yield was down .03 to 4.21%. Lodging stocks jumped on the Hersha Hospitality buyout news, led by the REITs. HT was up 56%, BHR rose 16%, AHT was up 10%, and then CLDT, INN, XHR, and SHCO were up 6% each. On the other side, AINC traded down -9% to a new low.
Hersha Hospitality Trust and KSL Capital Partners, LLC announced a definitive merger agreement under which affiliates of KSL will acquire all of the outstanding common shares of Hersha for $10.00 per share in an all-cash transaction valued at approximately $1.4 billion. Under the merger agreement's terms, Hersha shareholders will receive $10.00 in cash for each common share they own. Holders of Hersha's 6.875% Series C Cumulative Redeemable Preferred Shares, 6.50% Series D Cumulative Redeemable Preferred Shares, and 6.50% Series E Cumulative Redeemable Shares will receive $25.00 in cash, plus any accrued and unpaid dividends to which they are entitled, for each preferred share they own. The transaction is expected to close in the fourth quarter of 2023. The price, 60% above Friday's close when you include the one additional dividend that will be granted, sent a signal to Wall Street, judging by the rally in the hotel REIT group today. Will this cause a re-rating of the valuations of the Lodging REITs, analysts going from more bearish to more bullish, or is this a sign that the next phase of M&A in the space will be on the REIT side? The initial comment
