Hersha Hospitality Downgraded After $1.4B KSL Acquisition, Analyst Calls It 'End Of An Era'

B.Riley Securities analyst Bryan Maher downgraded Hersha Hospitality Trust (NYSE: HT) to Neutral from Buy at an increased price target of $10 from $9. 

The move came after the announcement of HT's acquisition by KSL Capital Partners for $10 per share. 

The all-cash transaction is valued at approximately $1.4 billion. The purchase price represented a premium of approximately 60% over Hersha's closing share price on August 25, 2023.

Related: Equity Fund Buys Hersha Hospitality Trust: Hotel REITs Go Wild

The analyst had suspected that the REIT could be acquired within 12-18 months, given its refined portfolio of mainly upper upscale and upscale urban and leisure hotels in attractive gateway markets.

Maher thinks KSL has deep expertise in owning hotels and resorts throughout North America and the Caribbean. 

The analyst expects KSL to retain the bulk of the 23 wholly-owned Hersha properties and projects KSL to trade only a handful of them and generate a profit on the assets it sells.

The analyst expects adjusted EBITDA and AFFO per share of $107.0 million and $1.18 for FY24 and $112.0 million and $1.30 for FY25, respectively. 

Price Action: HT shares are trading higher by 0.31% at $9.85 on the last check Friday.