Shareholders of Hersha Hospitality Trust approved the $1.4 billion, all-cash deal for KSL Capital Partners to take the hotel real estate investment trust private.
Hersha held a special meeting Nov. 8 for the vote. A Form 8-K filed with the U.S. Securities and Exchange Commission shows that more than 28.7 million shares voted in favor of the deal while 172,106 were against with 95,479 abstentions.
Hersha and KSL Capital announced the deal on Aug. 28. The offer was for KSL Capital to acquire all outstanding common shares of Hersha for $10 per share. The price represents a premium of about 60% over the REIT's closing share price on Aug. 25 and has hovered just short of $10 since that date.
The Harrisburg, Pennsylvania-based REIT started as the Hersha Group in 1984, founded by Hasu Shah, now Hersha's chairman emeritus, according to the company's website. The company became a publicly traded REIT in 1998, and it is named after Hasu's wife, Hersha. Their sons, Jay and Neil Shah, have served in several leadership roles at the REIT over the years, with Jay currently serving as the executive chairman and Neil as president and CEO.
A news release from October announcing the special meeting states that should shareholders approve the acquisition, Hersha executives expect the deal to close during the fourth quarter subject to the satisfaction or waiver of the other remaining closing conditions.
Hersha has a portfolio of 25 hotels with 3,811 rooms in New York, Boston, Philadelphia, California, Florida and Washington, D.C. The hotels are a collection of luxury and lifestyle properties in coastal gateway and resort markets.
KSL Capital is a Denver-based private equity firm that focuses on travel and leisure segments, including hospitality. It has acquired several hospitality companies over the years. Prior to the Hersha deal, it acquired a majority of Italy's Sereno Hotels, bought The Pig Hotels in the United Kingdom and also increased its investment in Under Canvas. In 2016, the company acquired Outrigger Resorts & Hotels.
KSL Capital formed Alterra Mountain Company in 2018 in a joint venture with Henry Crown and Co. as a platform for the ski resorts they each own. The company also launched Mission Hill — a select-service hotel acquisition platform — in 2021.
During the meeting, Hersha shareholders also voted down a second proposal on compensation for executive officers in relation to the deal, with roughly 16.7 million shares against and 11.9 million shares in favor. The board of directors sought the shareholder approval on a non-binding, advisory basis, however. A proxy statement filed by Hersha stated the underlying arrangements are contractual and not subject to shareholder approval, and the executive officers would be eligible to receive compensation in relation to the deal.
It is still unclear at this time how the deal will affect Hersha Hospitality Management, the third-party management company also founded by the Shah family that operates a majority of the REIT's portfolio.