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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,  D.C. 20549 
  
FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): March 19, 2020
 
HERSHA HOSPITALITY TRUST
(Exact name of registrant as specified in its charter)
   
Maryland001-1476525-1811499
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
  44 Hersha Drive
Harrisburg, Pennsylvania 17102
(Address and zip code of
principal executive offices)
 
Registrant’s telephone number, including area code: (717) 236-4400
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Shares of Beneficial Interest, par value $.01 per shareHTNew York Stock Exchange
6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per shareHT-PCNew York Stock Exchange
6.50% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per shareHT-PDNew York Stock Exchange
6.50% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per shareHT-PENew York Stock Exchange




Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Effective March 19, 2019, Jay H. Shah, the Chief Executive Officer of Hersha Hospitality Trust (the “Company”), and Neil H. Shah, the Company’s President and Chief Operating Officer, each agreed to reduce his base salary for 2020 by 50% in order to enhance the liquidity profile of the Company given the difficult operating environment resulting from the COVID-19 virus outbreak.

In addition, each member of the Company’s Board of Trustees (the “Board”) has agreed to receive all fees to which such trustee is entitled for his or her service on the Board, including the annual retainer, committee membership and lead and committee chair fees, in the form of the Company’s common shares rather than in cash for the balance of 2020.

The foregoing changes to the Company’s executive compensation and Board compensation were unanimously approved by the Board.

Item 7.01. Regulation FD Disclosure

On March 19, 2020, the Company issued a press release announcing that, due to recent lodging demand shocks from the COVID-19 virus outbreak, the Company is withdrawing its first quarter and full-year 2020 guidance. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 8.01 Other Events.

On March 19, 2020, Hersha Hospitality Trust (the “Company”) issued a press release announcing that it is suspending dividends on its common shares, 6.875% Series C Cumulative Redeemable Preferred Shares, 6.50% Series D Cumulative Redeemable Preferred Shares and 6.50% Series E Cumulative Redeemable Preferred Shares, which is anticipated to last through the end of 2020. The Company also announced that it has revoked the dividends previously declared on the Company’s common shares and preferred shares on March 5, 2020. Dividends will continue to be reviewed quarterly by the Company’s Board of Trustees. A copy of the press release is furnished hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.Description
Press release issued March 19, 2020




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  HERSHA HOSPITALITY TRUST 
       
       
Date: March 19, 2020By:/s/ Ashish R. Parikh 
  Name:Ashish R. Parikh 
  Title:Chief Financial Officer 


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Section 2: EX-99.1 (EX-99.1)

Document
HERSHA HOSPITALITY TRUST
510 Walnut Street | 9th Floor
Philadelphia | PA | 19106
p. 215.238.1046 | f. 215.238.0157
hersha.com
For Immediate Release

Hersha Hospitality Trust Provides Portfolio Update Related to COVID-19 Outbreak

Philadelphia, PA, March 19, 2020 -- Hersha Hospitality Trust (NYSE: HT) (“Hersha” or the “Company”), owner of high-quality upscale and lifestyle hotels in urban gateway markets and resort destinations, today announced that due to the recent lodging demand shocks stemming from the COVID-19 outbreak, the Company’s first quarter and full year 2020 guidance presented in its fourth-quarter 2019 earnings release should not be relied upon.

“Since our fourth-quarter earnings call just over three weeks ago, we have experienced an unprecedented pace of transient and group cancellations across our portfolio along with a rapid and pervasive deterioration of forward booking pace related to the outbreak and spread of COVID-19. The demand shock has materially impacted the industry and our portfolio. Although the full impact of the national emergency will become more apparent in the coming weeks, we are working side-by-side with our operators to stem the economic effects of declining revenues. Since this situation is evolving rapidly across all markets, we are unable to provide a clear roadmap regarding the potential impact the COVID-19 outbreak will have on our first-quarter and full-year results,” stated Mr. Jay H. Shah, Hersha’s Chief Executive Officer.

Hersha Hospitality Trust has taken measures to enhance the liquidity profile of the Company and its properties during this unprecedented operating environment. These initiatives include:
Comprehensive containment of operating expenses through deep cost cuts, restructuring, and select closing of hotels
Reducing floor operations and closing restaurants and bars to “shrink” hotels to more efficiently serve our limited guest count and curb expenses
Suspending planned capital expenditures for the balance of the year, resulting in $10 million to $15 million of estimated savings
CEO & COO reducing salary by 50% and the Board of Trustees electing to take all payments in stock for the remainder of 2020, resulting in cash preservation and additional liquidity

The Company’s top priority during this uncertain time is maintaining adequate liquidity as we manage the Company under the press and uncertainty of the COVID-19 virus and its effect on the travel and hospitality industries. In addition to the previously announced asset dispositions, the Company continues to explore various asset sales and is in active dialogue with our lending partners and bank group to shore up capital available on our $250 million unsecured credit facility. Furthermore, as a part of the Company’s plan to preserve cash, the Company is revoking the previously declared dividends from March 5, 2020 on its common shares, 6.875% Series C Cumulative Redeemable Preferred Shares, 6.50% Series D Cumulative Redeemable Preferred Shares and 6.50% Series E Cumulative Redeemable Preferred Shares.

Mr. Shah continued, "Our Board of Trustees will continue to review the Company’s performance on a quarterly basis until an appropriate time for reinstatement is determined. We anticipate suspending our common and preferred dividend distributions for the balance of the year, generating additional cash liquidity of approximately $72.5 million for 2020 based on last year’s distribution rates. While we are adapting our operations and implementing cost reduction strategies in response to the national crisis, the Company is prioritizing liquidity above all until the operating environment becomes more clear.”



The Company will continue to review taxable income on a regular basis and take measures, if necessary, to ensure that it continues to meet the minimum distribution requirements to maintain its status as a real estate investment trust.

Unpaid dividends on Hersha’s preferred shares shall accrue without interest. No cash dividends may be paid on Hersha’s common shares unless all accrued but unpaid dividends on its preferred shares have been (or contemporaneously are) declared and paid, or declared and a sum sufficient for such payment has been set apart for payment for all past dividend periods.

“Our executive team has navigated three cycles together, including previously unprecedented demand shocks such as September 11, 2001 and the Great Financial Crisis. We expect a very difficult environment throughout 2020 and particularly across the second and third quarters, but we have faith in our healthcare system to expeditiously support the country through this trying time. Our purpose-built portfolio, reconstructed and holistically renovated across the last five years, resides in some of the most valuable urban, gateway markets in the US and is positioned to welcome back all of our loyal and first-time guests when fears abate and the world’s population can resume their love of travel. As active revenue and asset managers we are confident that the strategies we have implemented to reduce expenses and enhance our liquidity will allow us to weather this storm and ultimately lead to value creation as the country recovers from this extraordinary event,” concluded Mr. Shah.

***

Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale, luxury and lifestyle hotels in urban gateway markets and resort destinations. The Company's 48 hotels totaling 7,644 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT”. For more information on the Company, and the Company’s hotel portfolio, please visit the Company's website at www.hersha.com

Forward Looking Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those reflected in the forward-looking statement. For a description of these factors, please review the information under the heading “Risk Factors” included in Hersha Hospitality Trust’s filings with the U.S. Securities and Exchange Commission Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent reports filed by the Company with the Securities and Exchange Commission from time to time.

Contact: Ashish Parikh, Chief Financial Officer
Greg Costa, Manager of Investor Relations & Finance
Phone: (215) 238-1046
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