Hersha Hospitality Hersha (HT
) is a U.S. REIT that owns 64 hotels containing 8,600 rooms. Hersha owns a young and high-quality portfolio of limited-service hotels in quality urban centers with high barriers to entry. Approximately 90% of the company's EBITDA is generated from six markets: New York City (46%), Philadelphia (12%), Washington DC (11%), Boston (10%), Los Angeles (6%), and Miami (5%). Limited service hotels typically have significantly higher margins and less volatile cash flows and, as we noted earlier this year, hotel operators have more flexibility to adjust room rates in response to economic conditions. Hersha has a reasonable financial position (mostly non-recourse debt) and is likely to compound NAV in the next couple of years, as the lodging recovery continues and its younger assets and development pipeline stabilize. Hersha Common is trading at a meaningful discount to NAV and we believe it is a likely take-over candidate, given its size and its unique portfolio.
From Third Avenue Management's semi-annual 2013 report.