10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number: 001-14765

HERSHA HOSPITALITY TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland	251811499
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
44 Hersha Drive, Harrisburg, PA	17102
(Address of Registrant’s Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (717) 236-4400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Shares of Beneficial Interest, par value $.01 per share	New York Stock Exchange
Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per share	New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

1

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

¨ Yes x No

Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days.

x Yes  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer xAccelerated filer

Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  x No

The aggregate market value of the outstanding Class A common shares held by nonaffiliates of the registrant, computed by reference to the closing sale price at which Class A common shares were last sold on June 30, 2013, was approximately $1.1 billion.

As of February 25, 2014, the number of Class A common shares outstanding was 202,763,419 and there were no Class B common shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement, to be filed with the Securities and Exchange Commission not later than 120 days after the end of the registrant’s last fiscal year pursuant to Regulation 14A, are incorporated herein by reference into Part III.

2

HERSHA HOSPITALITY TRUST

Table of Contents

Item No.		Form 10-K Page
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
PART I
ITEM 1.	Business	6
ITEM 1A.	Risk Factors	13
ITEM 1B.	Unresolved Staff Comments	20
ITEM 2.	Properties	20
ITEM 3.	Legal Proceedings	20
ITEM 4.	Mine Safety Disclosures	20
PART II
ITEM 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
ITEM 6.	Selected Financial Data	20
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 8.	Financial Statements and Supplementary Data	20
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
ITEM 9A.	Controls and Procedures	20
ITEM 9B.	Other Information	20
PART III
ITEM 10.	Trustees, Executive Officers and Corporate Governance	20
ITEM 11.	Executive Compensation	20
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	20
ITEM 13.	Certain Relationships and Related Transactions, and Trustee Independence	20
ITEM 14.	Principal Accountant Fees and Services	20
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	20

3

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

Unless the context otherwise requires, references in this report to: (1) “we,” “us,” “our,” the “Company” and “Hersha” mean Hersha Hospitality Trust and its consolidated subsidiaries, including Hersha Hospitality Limited Partnership, taken as a whole; (2) “HHLP” and “our operating partnership” mean Hersha Hospitality Limited Partnership; and (3) “common shares” mean our Class A common shares of beneficial interest, $0.01 par value per share.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”), as amended, including, without limitation, statements containing the words, “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” and words of similar import. Such forward-looking statements relate to future events, our plans, strategies, prospects and future financial performance, and involve known and unknown risks that are difficult to predict, uncertainties and other factors which may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers should specifically consider the various factors identified in this report including, but not limited to those discussed in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” that could cause actual results to differ. Statements regarding the following subjects are forward-looking by their nature:

●our business or investment strategy;

●our projected operating results;

●our distribution policy;

●our liquidity;

●completion of any pending transactions;

●our ability to obtain future financing arrangements;

●our understanding of our competition;

●market trends; and

●projected capital expenditures.

Forward-looking statements are based on our beliefs, assumptions and expectations, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Readers should not place undue reliance on forward-looking statements. The following factors could cause actual results to vary from our forward-looking statements:

●general volatility of the capital markets and the market price of our common shares;

●changes in our business or investment strategy;

●availability, terms and deployment of capital;

●availability of qualified personnel;

●changes in our industry and the market in which we operate, interest rates, or the general economy;

●the degree and nature of our competition;

●financing risks, including the risk of leverage and the corresponding risk of default on our mortgage loans and other debt and potential inability to refinance or extend the maturity of existing indebtedness;

●levels of spending in the business, travel and leisure industries, as well as consumer confidence;

●declines in occupancy, average daily rate and RevPAR and other hotel operating metrics;

●hostilities, including future terrorist attacks, or fear of hostilities that affect travel;

●financial condition of, and our relationships with, our joint venture partners, third-party property managers, franchisors and hospitality joint venture partners;

●the degree and nature of our competition;

●increased interest rates and operating costs;

●ability to complete development and redevelopment projects;

●risks associated with potential acquisitions, including the ability to ramp up and stabilize newly acquired hotels with limited or no operating history, and dispositions of hotel properties;

●availability of and our ability to retain qualified personnel;

●our failure to maintain our qualification as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986 “the Code”, as amended;

●environmental uncertainties and risks related to natural disasters;

●changes in real estate and zoning laws and increases in real property tax rates; and

●the factors discussed in Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2013 under the heading “Risk Factors” and in other reports we file with the U.S. Securities and Exchange Commission (“SEC”) from time to time.

4

These factors are not necessarily all of the important factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors, many of which are beyond our control, also could harm our results, performance or achievements.

All forward-looking statements contained in this report are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

5

PART I

Item 1. Business

OVERVIEW

Hersha Hospitality Trust is a self-advised Maryland real estate investment trust that was organized in 1998 and completed its initial public offering in January of 1999. Our common shares are traded on the New York Stock Exchange under the symbol “HT.” We invest primarily in institutional grade hotels in major urban gateway markets including New York, Washington DC, Boston, Philadelphia, San Diego, Los Angeles and Miami. Our primary strategy is to continue to acquire high quality, upscale, mid-scale and extended-stay hotels in metropolitan markets with high barriers to entry in the markets with similar characteristics. We have operated and intend to continue to operate so as to qualify as a REIT for federal income tax purposes.

In addition to the direct acquisition of hotels, historically we have made investments in hotels through joint ventures with strategic partners or through equity contributions, secured mezzanine loans and land leases. Although we may invest in hotels through joint ventures, secured development loans and land leases, we are not actively pursuing additional joint venture investments and do not expect to originate any new secured mezzanine loans or enter into any new land leases as part of our hotel investment strategy in the near term.

We seek to identify acquisition candidates located in markets with economic, demographic and supply dynamics favorable to hotel owners and operators. Through our due diligence process, we select those acquisition targets where we believe selective capital improvements and intensive management will increase the hotel’s ability to attract key demand segments, enhance hotel operations and increase long-term value.

As of December 31, 2013, our portfolio consisted of 48 wholly owned limited and full service properties with a total of 6,876 rooms and interests in six limited and full service properties owned through joint venture investments with a total of 1,513 rooms. These 54 properties, with a total of 8,389 rooms, are located in Arizona, California, Connecticut, Delaware, District of Columbia, Florida, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia and operate under leading brands, owned by Marriott International, Inc. (“Marriott”), Hilton Worldwide, Inc. (“Hilton”), InterContinental Hotels Group (“IHG”), Hyatt Corporation (“Hyatt”), or Starwood Hotels and Resorts Worldwide, Inc. (“Starwood”). In addition, some of our hotels operate as independent boutique hotels.

We are structured as an umbrella partnership REIT, or UPREIT, and we own our hotels and our investments in joint ventures through our operating partnership, Hersha Hospitality Limited Partnership, for which we serve as general partner. As of December 31, 2013, we owned an approximate 96.7% partnership interest in our operating partnership.

Our wholly-owned hotels are managed by Hersha Hospitality Management, L.P. (“HHMLP”), a privately held, qualified management company owned by certain of our trustees and executive officers and other unaffiliated third party investors. Third party qualified management companies manage the hotels that we own through joint venture interests. We lease our wholly-owned hotels to 44 New England Management Company (“44 New England”), our wholly-owned taxable REIT subsidiary (“TRS”). Each of the hotels that we own through a joint venture investment is leased to another TRS that is owned by the respective joint venture or an entity owned in part by 44 New England.

Our principal executive office is located at 44 Hersha Drive, Harrisburg, Pennsylvania 17102. Our telephone number is (717) 236-4400. Our website address is www.hersha.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this report.

AVAILABLE INFORMATION

We make available free of charge through our website (www.hersha.com) our code of ethics, corporate governance guidelines and the charters of the committees of our Board of Trustees (Acquisition Committee, Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Risk Sub-Committee of the Audit Committee). We also make available through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. The information available on our website is not, and shall not be deemed to be, a part of this report or incorporated into any other filings we make with the SEC.

6

INVESTMENT IN HOTEL PROPERTIES

Our operating strategy focuses on increasing hotel performance for our portfolio. The key elements of this strategy are:

working together with our hotel management companies to increase occupancy levels and revenue per available room, or "RevPAR", through active property-level management, including intensive marketing efforts to tour groups, corporate and government extended stay customers and other wholesale customers and expanded yield management programs, which are calculated to better match room rates to room demand; and

maximizing our earnings by managing costs and positioning our hotels to capitalize on increased demand in the high quality, upper-upscale, upscale, mid-scale and extended-stay lodging segments, which we believe can be expected to follow from improving economic conditions.

ACQUISITIONS

We selectively acquire high quality branded upper-upscale, upscale, mid-scale and extended-stay hotels in metropolitan markets with high barriers-to-entry and independent boutique hotels in similar markets. Through our due diligence process, we select those acquisition targets where we believe selective capital improvements and intensive management will increase the hotel’s ability to attract key demand segments, enhance hotel operations and increase long-term value. We believe that current market conditions are creating opportunities to acquire hotels at attractive prices. In executing our disciplined acquisition program, we will consider acquiring hotels that meet the following additional criteria:

nationally-franchised hotels operating under popular brands, such as Marriott Hotels & Resorts, Hilton Hotels, Courtyard by Marriott, Residence Inn by Marriott, Hilton Garden Inn, Hampton Inn, Sheraton Hotels & Resorts, DoubleTree, Embassy Suites, Hyatt House, Hyatt Place, TownePlace Suites and Holiday Inn Express;

hotels in locations with significant barriers-to-entry, such as high development costs, limited availability of land and lengthy entitlement processes;

hotels in our target markets where we can realize operating efficiencies and economies of scale; and

independent boutique hotels in similar markets

Since our initial public offering in January 1999 and through December 31, 2013, we have acquired, wholly or through joint ventures, a total of 104 hotels, including 28 hotels acquired from entities controlled by certain of our trustees and executive officers. Of the 28 acquisitions from entities controlled by certain of our trustees and executive officers, 25 were newly constructed or substantially renovated by these entities prior to our acquisition. We take advantage of our relationships with entities that are developing or substantially renovating hotels, including entities controlled by certain of our trustees and executive officers, to identify future hotel acquisitions that we believe may be attractive to us. We intend to continue to acquire hotels from entities controlled by certain of our trustees and executive officers if approved by a majority of our independent trustees in accordance with our related party transaction policy.

DISPOSITIONS

We evaluate our hotels on a periodic basis to determine if these hotels continue to satisfy our investment criteria. We may sell hotels opportunistically based upon management’s forecast and review of the cash flow potential of each hotel and re-deploy the proceeds into debt reduction or acquisitions of hotels. We utilize several criteria to determine the long-term potential of our hotels. Hotels are identified for sale based upon management’s forecast of the strength of each hotel’s cash flows and its ability to remain accretive to our portfolio. Our decision to sell a hotel is often predicated upon the size of the hotel, strength of the franchise, property condition and related costs to renovate the property, strength of market demand generators, projected supply of hotel rooms in the market, probability of increased valuation and geographic profile of the hotel. All asset sales are comprehensively reviewed by the Acquisition Committee of our Board of Trustees, which committee consists solely of independent trustees. During the time since our initial public offering in 1999 through December 31, 2013, we have sold a total of 57 hotels.

FINANCING

We intend to finance our long-term growth with common and preferred equity issuances and debt financing having staggered maturities. Our debt includes unsecured debt provided primarily under our $400 million unsecured credit facility which provides for a $150 million unsecured term loan and a $250 million unsecured revolving credit facility and secured mortgage debt in our hotel properties. We anticipate refinancing this facility to expand the unsecured term loan from $150 million to $250 million.  We intend to use the expanded term loan capacity and the undrawn portion of our $400 million senior unsecured credit facility to pay down mortgage debt and fund future acquisitions, as well as for capital improvements and working capital requirements. Subject to market conditions, we intend to repay amounts outstanding under the revolving line of credit portion of our credit facility from time to time with proceeds from periodic common and preferred equity issuances,

7

long-term debt financings and cash flows from operations. When purchasing hotel properties, we may issue common and preferred limited partnership interests in our operating partnership as full or partial consideration to sellers.

FRANCHISE AGREEMENTS

We believe that the public’s perception of quality associated with a franchisor is an important feature in the operation of a hotel. Franchisors provide a variety of benefits for franchisees, which include national advertising, publicity and other marketing programs designed to increase brand awareness, training of personnel, continuous review of quality standards and centralized reservation systems. Most of our hotels operate under franchise licenses from national hotel franchisors, including:

Franchisor	Franchises
Marriott International	Marriott, Residence Inn, Courtyard by Marriott
Hilton Hotels Corporation	Hilton, Hilton Garden Inn, Hampton Inn
IHG	Holiday Inn, Holiday Inn Express, Holiday Inn Express & Suites, Candlewood Suites
Hyatt Hotels Corporation	Hyatt House, Hyatt Place, Hyatt
Starwood Hotels	Sheraton Hotels

We anticipate that most of the hotels in which we invest will be operated pursuant to franchise licenses.

The franchise licenses generally specify certain management, operational, record-keeping, accounting, reporting and marketing standards and procedures with which the franchisee must comply. The franchise licenses generally obligate our lessees to comply with the franchisors’ standards and requirements with respect to training of operational personnel, safety, maintaining specified insurance, the types of services and products ancillary to guest room services that may be provided by our lessees, display of signage, and the type, quality and age of furniture, fixtures and equipment included in guest rooms, lobbies and other common areas. In general, the franchise licenses require us to pay the franchisor a fee typically ranging between 6.0% and 9.3% of such hotel’s revenues.

PROPERTY MANAGEMENT

We work closely with our hotel management companies to operate our hotels and increase same hotel performance for our portfolio.

Through our TRS and our investment in joint ventures, we have retained the following management companies to operate our hotels, as of December 31, 2013:

	Wholly Owned		Joint Ventures		Total
Manager	Hotels	Rooms	Hotels	Rooms	Hotels	Rooms
Hersha Hospitality Management, L.P.	48	6,876	-	-	48	6,876
Waterford Hotel Group, Inc.	-	-	4	1,231	4	1,231
South Bay Boston Management, Inc.	-	-	2	282	2	282
Total	48	6,876	6	1,513	54	8,389

Each management agreement provides for a set term and is subject to early termination upon the occurrence of defaults and certain other events described therein. As required under the REIT qualification rules, all managers, including HHMLP, must qualify as an “eligible independent contractor” during the term of the management agreements.

Under the management agreements, the manager generally pays the operating expenses of our hotels. All operating expenses or other expenses incurred by the manager in performing its authorized duties are reimbursed or borne by our applicable TRS to the extent the operating expenses or other expenses are incurred within the limits of the applicable approved hotel operating budget. Our managers are not obligated to advance any of their own funds for operating expenses of a hotel or to incur any liability in connection with operating a hotel.

For their services, the managers receive a base management fee, and if a hotel meets and exceeds certain thresholds, an additional incentive management fee. For the year ended December 31, 2013, these thresholds were not met and incentive management fees were not earned. The base management fee for a hotel is due monthly and is generally equal to 3% of the gross revenues associated with that hotel for the related month.

8

CAPITAL IMPROVEMENTS, RENOVATION AND REFURBISHMENT

Under certain loan agreements, we have established capital reserves for our hotels to maintain the hotels in a condition that complies with their respective requirements. These capital reserves typically range from 3% to 4% of each hotel’s gross revenues. In addition, we may upgrade hotels in our portfolio in order to capitalize on opportunities to increase revenue, and, as deemed necessary by our management, to seek to meet competitive conditions and preserve asset quality. We will also renovate hotels when we believe the investment in renovations will provide an attractive return to us through increased revenues and profitability and is in the best interests of our shareholders. We maintain a capital expenditures policy by which replacements and renovations are monitored to determine whether they qualify as capital improvements. All items that are deemed to be repairs and maintenance costs are expensed and recorded in Hotel Operating Expenses in the Consolidated Statements of Operations.

OPERATING PRACTICES

Our hotel managers utilize centralized accounting and data processing systems, which facilitate financial statement and budget preparation, payroll management, quality control and other support functions for the on-site hotel management team. Our hotel managers also provide centralized control over purchasing and project management (which can create economies of scale in purchasing) while emphasizing local discretion within specific guidelines.

DISTRIBUTIONS

We have made 60 consecutive quarterly distributions to the holders of our common shares since our initial public offering in January 1999 and intend to continue to make regular quarterly distributions to our shareholders as approved by our Board of Trustees.

The following table sets forth distribution information for the last two calendar years.

Common Shares
Quarter to which Distribution Relates	Record Date	Payment Date		Class A Common Shares and Common Units Per Share Distribution Amount
2013
Fourth Quarter	1/2/2014	1/16/2014	$	0.06
Third Quarter	10/1/2013	10/15/2013	$	0.06
Second Quarter	7/1/2013	7/15/2013	$	0.06
First Quarter	4/1/2013	4/15/2013	$	0.06
2012
Fourth Quarter	12/31/2012	1/15/2013	$	0.06
Third Quarter	10/1/2012	10/15/2012	$	0.06
Second Quarter	6/29/2012	7/16/2012	$	0.06
First Quarter	3/30/2012	4/16/2012	$	0.06

9

Preferred Shares
Quarter to which Distribution Relates	Record Date	Payment Date		Series A Preferred Per Share Distribution Amount			Series B Preferred Per Share Distribution Amount		Series C Preferred Per Share Distribution Amount
2013
Fourth Quarter	1/1/2014	1/15/2014		N/A		$	0.50	$	0.43
Third Quarter	10/1/2013	10/15/2013		N/A		$	0.50	$	0.43
Second Quarter	7/1/2013	7/15/2013		N/A		$	0.50	$	0.43
First Quarter	4/1/2013	4/15/2013		N/A		$	0.50	$	0.19	(1)
First Quarter	3/28/2013	3/28/2013	$	0.41	(2)		N/A		N/A
2012
Fourth Quarter	1/1/2013	1/15/2013	$	0.50		$	0.50		N/A
Third Quarter	10/1/2012	10/15/2012	$	0.50		$	0.50		N/A
Second Quarter	7/1/2012	7/16/2012	$	0.50		$	0.50		N/A
First Quarter	4/1/2012	4/16/2012	$	0.50		$	0.50		N/A

(1) Partial period distribution

(2) On March 28, 2013, Hersha Hospitality Trust redeemed all of its issued and outstanding shares of 8.00% Series A Cumulative Redeemable Preferred Stock.  The Series A Preferred Shares were redeemed at a per share redemption price of $25.00 together with accrued and unpaiddividends to the redemption date for an aggregate per share redemption price of $25.4056.

Our Board of Trustees will determine the amount of our future distributions in its sole discretion and its decision will depend on a number of factors, including the amount of funds from operations, our partnership’s financial condition, debt service requirements, capital expenditure requirements for our hotels, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the trustees deem relevant. Our ability to make distributions will depend on the profitability of and cash flow available from our hotels. There can be no assurance we will continue to pay distributions at the rates above or any other rate. Additionally, we may, if necessary and allowable, pay taxable distributions of our shares or debt securities to meet the distribution requirements. There are no assurances we will be able to continue to make quarterly distributions at the current rate.

SEASONALITY

Our hotels’ operations historically have been seasonal in nature, reflecting higher revenues and occupancy rates during the second and third quarters. This seasonality causes fluctuations in our quarterly operating revenues, profitability, and cash flow.

COMPETITION

The U.S. hotel industry is highly competitive. Our hotels compete with other hotels for guests in each of their markets on the basis of several factors, including, among others, location, quality of accommodations, convenience, brand affiliation, room rates, service levels and amenities, and level of customer service. Competition is often specific to the individual markets in which our hotels are located and includes competition from existing and new hotels operated under premium brands in the focused-service and full-service segments. We believe that hotels, such as our hotels, that are affiliated with leading national brands, such as the Marriott, Hilton, Hyatt, IHG or Starwood brands, will enjoy the competitive advantages associated with operating under such brands. Increased competition could harm our occupancy and revenues and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make, which may materially and adversely affect our operating results and liquidity.

The upper-upscale, upscale and mid-scale, limited service segments of the hotel business are highly competitive. Among many other factors, our hotels compete on the basis of location, room rates, quality, service levels, reputation, and reservation systems. There are many competitors in our market segments and new hotels are routinely being constructed. Additions to supply create new competitors, in some cases without corresponding increases in demand for hotel rooms.

10

We also compete for hotel acquisitions with entities that have investment objectives similar to ours. We face competition for the acquisition of hotels from institutional pension funds, private equity funds, REITs, hotel companies and others who are engaged in the acquisition of hotels. Some of these competitors have substantially greater financial and operational resources and access to capital than we have and may have greater knowledge of the markets in which we seek to invest. This competition may reduce the number of suitable investment opportunities offered to us, increase the bargaining power of property owners seeking to sell to us and decrease the attractiveness of the terms on which we may acquire our targeted hotel investments, including the cost thereof, making it more difficult for us to acquire new properties on attractive terms.

EMPLOYEES

As of December 31, 2013, we had 49 employees who were principally engaged in managing the affairs of the Company unrelated to property operations.  We believe that our relations with our employees are satisfactory.

TAX STATUS

We elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ended December 31, 1999. As long as we qualify for taxation as a REIT, we generally will not be subject to federal income tax on the portion of our income that is currently distributed to our shareholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.  Additionally, we will generally be unable to qualify as a REIT for four years following the year in which qualification is lost.  Even if we qualify for taxation as a REIT, we will be subject to certain state and local taxes on our income and property and to federal income and excise taxes on our undistributed income.

We own interests in several TRSs. We may own up to 100% of the stock of a TRS. A TRS is a taxable corporation that may lease hotels from our operating partnership and its subsidiaries under certain circumstances. Overall, no more than 25% of the value of our assets may consist of securities of one or more TRSs. In addition, no more than 25% of our gross income for any year may consist of dividends from one or more TRSs and income from certain non-real estate related sources.

A TRS is permitted to lease hotels from us as long as the hotels are operated on behalf of the TRS by a third party manager that qualifies as an "eligible independent contractor." To qualify for that treatment, the manager must satisfy the following requirements:

1.such manager is, or is related to a person who is, actively engaged in the trade or business of operating “qualified lodging facilities” for any person unrelated to us and the TRS;

2.such manager does not own, directly or indirectly, more than 35% of our shares;

3.no more than 35% of such manager is owned, directly or indirectly, by one or more persons owning 35% or more of our shares; and

4.we do not, directly or indirectly, derive any income from such manager.

The deductibility of interest paid or accrued by a TRS to us is limited to assure that the TRS is subject to an appropriate level of corporate taxation. A 100% excise tax is imposed on transactions between a TRS and us that are not on an arm’s-length basis.

REGULATION

General

Our hotels are subject to various U.S. federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of our hotels has the necessary permits and approvals to operate its business.

Americans with Disabilities Act

Our hotels must comply with applicable provisions of the Americans with Disabilities Act of 1993, or ADA, to the extent that such hotels are "public accommodations" as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our hotels where such removal is readily achievable. We believe that our hotels are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, non-compliance with the ADA could result in imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our hotels and to make alterations as appropriate in this respect.

11

Environmental Matters

Under various laws relating to the protection of the environment, a current or previous owner or operator (including tenants) of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances at that property and may be required to investigate and clean up such contamination at that property or emanating from that property. These costs could be substantial and liability under these laws may attach without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several. The presence of contamination or the failure to remediate contamination at our hotels may expose us to third-party liability or materially and adversely affect our ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.

Our hotels are subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew and waste management. Our hotels incur costs to comply with these laws and regulations and could be subject to fines and penalties for non-compliance.

Environmental laws require that owners or operators of buildings with asbestos-containing building materials properly manage and maintain these materials, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators for failure to comply with these requirements. In addition, third parties may seek recovery from owners or operators for personal injury associated with exposure to asbestos-containing building materials.

Some of our hotels may contain or develop harmful mold or suffer from other adverse conditions, which could lead to liability for adverse health effects and costs of remediation. The presence of significant mold or other airborne contaminants at any of our hotels could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected hotel or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from guests or employees at our hotels and others if property damage or health concerns arise.

INSURANCE

We require comprehensive insurance to be maintained by our hotel management companies, including HHMLP, on each of our hotels, including liability and fire and extended coverage in amounts sufficient to permit the replacement of the hotel in the event of a total loss, subject to applicable deductibles. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes and acts of terrorism that may be uninsurable or not economically insurable. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impracticable to use insurance proceeds to replace the applicable hotel after such applicable hotel has been damaged or destroyed. Under such circumstances, the insurance proceeds received by us might not be adequate to restore our economic position with respect to the applicable hotel. If any of these or similar events occur, it may reduce the return from the attached property and the value of our investment.

FINANCIAL INFORMATION ABOUT SEGMENTS

We are in the business of acquiring equity interests in hotels, and we manage our hotels as individual operating segments that meet the aggregation criteria and are therefore disclosed as one reportable segment. See “Note 1 - Organization and Summary of Significant Accounting Policies” in Item 8 of this Annual Report on Form 10-K for segment financial information.

12

Item 1A. Risk Factors

You should carefully consider the following risks, together with the other information included in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition or results of operations may suffer. As a result, the trading price of our securities could decline, and you may lose all or part of any investment you have in our securities.

Risks Related to the Economy and Credit Markets

Difficult economic conditions may continue to adversely affect the hotel industry.

The performance of the hotel industry has historically been linked to key macroeconomic indicators, such as GDP growth, employment, corporate earnings and investment, and travel demand.  As these indicators improve, we anticipate that hotel operating fundamentals will improve as well.  However, if the U.S. economy should falter and there is an extended period of economic weakness, a recession or depression, our revenues and profitability could be adversely affected.

ThefailureofU.S.lawmakersto  reachanagreementonthenationaldebtceilingmaymateriallyadverselyaffectourbusiness,  financialconditionandresultsofoperations.

IntheeventU.S.lawmakersfailtoreachanagreementonthe  nationaldebtceiling,theU.S.coulddefaultonitsobligations,whichcouldnegativelyimpactthetradingmarketforU.S. government securities.Thismay,inturn,  negativelyaffectourabilitytoobtainfinancingforour investments.Asa  result,itmaymateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.

On August5,  2011,Standard&Poor’sdowngradedtheU.S.creditratingtoAA+forthe  firsttimeduetotheU.S. Congress’inabilitytoreachan effectiveagreementonthe  nationaldebtceilinganda  budgetina timelymanner.BecauseFannie MaeandFreddieMacareintheconservatorshipoftheU.S.Government,theimplicitcreditratingof  agencyMBSguaranteedby FreddieMac,FannieMaeorGinnieMaewerealsodowngradedtoAA+.Thisdowngradeincreasedtheuncertaintyregardingthe creditriskofagencyMBS.ThecurrentU.S.debtceilingand  budgetdeficitconcernshaveincreasedthepossibilityofthe credit-ratingagenciesfurtherdowngradingtheU.S.creditrating.OnOctober15,2013,FitchRatingsServiceplacedtheU.S. creditratingon  negativewatch,  warningthatafailurebytheU.S.GovernmenttohonorinterestorprincipalpaymentsonU.S. TreasurySecuritieswouldimpactitsdecisionwhethertodowngradetheU.S.creditrating.Fitchalsostatedthatthemannerand  durationofanagreementtoraisethedebtceilingandresolvethebudgetimpasse,as well astheperceivedriskofsuchevents  occurringinthefuture,wouldweighonitsratings.

AfurtherdowngradeoftheU.S.Government’screditratingcouldcreatebroaderfinancialturmoilanduncertainty,whichwould  weighheavilyontheglobalbankingsystem.Suchcircumstancescouldadverselyaffectourbusinessin  manyways, including,but  notlimitedto,adverselyimpactingourabilitytoobtainattractivefinancingforourinvestments and increasingthecostofsuchfinancingifitisobtained.  Asa  result,theseadverseeconomicandmarketconditionsmayalsoadverselyaffectour liquidity  position,andcouldincreaseourriskofa counterpartydefaultingonitsobligations.Ifanyoftheseeventsweretooccur,itcould materiallyadverselyaffectourbusiness,financialconditionandresultsofoperations.

A recession could result in declines in our average daily room rates, occupancy and RevPAR, and thereby have a material adverse effect on our results of operations.

The performance of the hotel industry has traditionally been closely linked with the general economy. During the recession of 2008 and 2009, overall travel was reduced, which had a significant effect on our results of operations. While operating results have subsequently improved, uncertainty in the strength and direction of the recovery and continued high unemployment have slowed the pace of the overall economic recovery. Therefore, there can be no assurance that any increases in hotel revenues or earnings at our properties will continue for any number of reasons, including, but not limited to, slower than anticipated growth in the economy and changes in travel patterns. A stall in the economic recovery or a resurgent recession would have a material adverse effect on our results of operations. If a property’s occupancy or room rates drop to the point where its revenues are insufficient to cover its operating expenses, then we would be required to spend additional funds for that property’s operating expenses.

In addition, if operating results decline at our hotels secured by mortgage debt, there may not be sufficient operating profit from the hotel to cover the debt service on the mortgage. In such a case, we may be forced to choose from a number of unfavorable options, including using corporate cash, drawing on our revolving credit facility, selling the hotel on disadvantageous terms, including an unattractive price, or defaulting on the mortgage debt and permitting the lender to foreclose. Any one of these options could have a material adverse effect on our business, results of operations, financial condition and ability to pay distributions to our shareholders.

13

Disruptions in the financial markets could adversely affect our ability to obtain sufficient third-party financing for our capital needs, including expansion, acquisition and other activities, on favorable terms or at all, which could materially and adversely affect us.

In recent years, the U.S. stock and credit markets have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets, making terms for certain financings less attractive, and in some cases have resulted in the unavailability of financing, even for companies which otherwise are qualified to obtain financing. In addition, several banks and other institutions that historically have been reliable sources of financing have gone out of business, which has reduced significantly the number of lending institutions and the availability of credit. Continued volatility and uncertainty in the stock and credit markets may negatively impact our ability to access additional financing for our capital needs, including expansion, acquisition activities and other purposes, on favorable terms or at all, which may negatively affect our business. Additionally, due to this uncertainty, we may in the future be unable to refinance or extend our debt, or the terms of any refinancing may not be as favorable as the terms of our existing debt. If we are not successful in refinancing our debt when it becomes due, we may be forced to dispose of hotels on disadvantageous terms, which might adversely affect our ability to service other debt and to meet our other obligations. A prolonged downturn in the financial markets may cause us to seek alternative sources of potentially less attractive financing and may require us to further adjust our business plan accordingly. These events also may make it more difficult or costly for us to raise capital through the issuance of new equity capital or the incurrence of additional secured or unsecured debt, which could materially and adversely affect us.

RISKS RELATED TO THE HOTEL INDUSTRY

Our hotels are subject to general hotel industry operating risks, which may impact our ability to make distributions to shareholders.

Our hotels are subject to all operating risks common to the hotel industry. The hotel industry has experienced volatility in the past, as have our hotels, and there can be no assurance that such volatility will not occur in the future. These risks include, among other things: competition from other hotels; over-building in the hotel industry that could adversely affect hotel revenues and hotel values; increases in operating costs due to inflation and other factors, which may not be offset by increased room rates; reduction in business and commercial travel and tourism; strikes and other labor disturbances of hotel employees; increases in energy costs and other expenses of travel; adverse effects of general and local economic conditions; and adverse political conditions. These factors could reduce revenues of the hotels and adversely affect our ability to make distributions to our shareholders.

The value of our hotels depends on conditions beyond our control.

Our hotels are subject to varying degrees of risk generally incident to the ownership of hotels. The underlying value of our hotels, our income and ability to make distributions to our shareholders are dependent upon the operation of the hotels in a manner sufficient to maintain or increase revenues in excess of operating expenses. Hotel revenues may be adversely affected by adverse changes in national economic conditions, adverse changes in local market conditions due to changes in general or local economic conditions and neighborhood characteristics, competition from other hotels, changes in interest rates and in the availability, cost and terms of mortgage funds, the impact of present or future environmental legislation and compliance with environmental laws, the ongoing need for capital improvements, particularly in older structures, changes in real estate tax rates and other operating expenses, adverse changes in governmental rules and fiscal policies, civil unrest, acts of terrorism, acts of God, including earthquakes, hurricanes and other natural disasters, acts of war, adverse changes in zoning laws, and other factors that are beyond our control. In particular, general and local economic conditions may be adversely affected by the previous terrorist incidents in New York, Washington, D.C. and Boston. Our management is unable to determine the long-term impact, if any, of these incidents or of any acts of war or terrorism in the United States or worldwide, on the U.S. economy, on us or our hotels or on the market price of our common shares.

Our investments are concentrated in a single segment of the hotel industry.

Our primary business strategy is to continue to acquire high quality, upper-upscale, upscale and mid-scale limited service and extended-stay hotels in metropolitan markets with high barriers to entry including New York, Washington DC, Boston, Philadelphia, San Diego, Los Angeles, Miami and other markets and other markets with similar characteristics. We are subject to risks inherent in concentrating investments in a single industry and in a specific market segment within that industry. The adverse effect on amounts available for distribution to shareholders resulting from a downturn in the hotel industry in general or the mid-scale segment in particular could be more pronounced than if we had diversified our investments outside of the hotel industry or in additional hotel market segments.

14

Operating costs and capital expenditures for hotel renovation may be greater than anticipated and may adversely impact distributions to shareholders.

Hotels generally have an ongoing need for renovations and other capital improvements, particularly in older structures, including periodic replacement of furniture, fixtures and equipment. Under the terms of our management agreements, we generally are obligated to pay the cost of expenditures for items that are classified as capital items under GAAP that are necessary for the continued operation of our hotels.

If these expenses exceed our expectations, the additional cost could have an adverse effect on amounts available for distribution to shareholders. In addition, we may acquire hotels in the future that require significant renovation. Renovation of hotels involves certain risks, including the possibility of environmental problems, construction cost overruns and delays, uncertainties as to market demand or deterioration in market demand after commencement of renovation and the emergence of unanticipated competition from hotels.

The hotel industry is highly competitive.

The hotel industry is highly competitive. Our hotels compete with other existing and new hotels in their geographic markets. Many of our competitors have substantially greater marketing and financial resources than we do. Effective marketing by our competitors may reduce our hotel revenue and adversely impact our ability to make distributions to our shareholders.

Risks of operating hotels under franchise licenses, which may be terminated or not renewed, may impact our ability to make distributions to shareholders.

The continuation of our franchise licenses is subject to specified operating standards and other terms and conditions. All of the franchisors of our hotels periodically inspect our hotels to confirm adherence to their operating standards. The failure to maintain such standards or to adhere to such other terms and conditions could result in the loss or cancellation of the applicable franchise license. It is possible that a franchisor could condition the continuation of a franchise license on the completion of capital improvements that the trustees determine are too expensive or otherwise not economically feasible in light of general economic conditions, the operating results or prospects of the affected hotel. In that event, the trustees may elect to allow the franchise license to lapse or be terminated.

There can be no assurance that a franchisor will renew a franchise license at each option period. If a franchisor terminates a franchise license, we may be unable to obtain a suitable replacement franchise, or to successfully operate the hotel independent of a franchise license. The loss of a franchise license could have a material adverse effect upon the operations or the underlying value of the related hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. Our loss of a franchise license for one or more of the hotels could have a material adverse effect on our partnership’s revenues and our amounts available for distribution to shareholders.

The hotel industry is seasonal in nature.

The hotel industry is seasonal in nature. Generally, hotel revenues are greater in the second and third quarters than in the first and fourth quarters. Our hotels’ operations historically reflect this trend. As a result, our results of operations may vary on a quarterly basis, impairing comparability of operating data and financial performance on a quarter to quarter basis.

The cyclical nature of the hotel industry may cause fluctuations in our operating performance, which could have a material adverse effect on us.

The hotel industry historically has been highly cyclical in nature. Fluctuations in lodging demand and, therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affect levels of business and leisure travel. In addition to general economic conditions, new hotel room supply is an important factor that can affect the hotel industry's performance, and overbuilding has the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth. We can provide no assurances regarding whether, or the extent to which, lodging demand will rebound or whether any such rebound will be sustained. An adverse change in lodging fundamentals could result in returns that are substantially below our expectations or result in losses, which could have a material adverse effect on us.

The increasing use of Internet travel intermediaries by consumers may materially and adversely affect our profitability.

Although a majority of rooms sold on the Internet are sold through websites maintained by the hotel franchisors and managers, some of our hotel rooms will be booked through Internet travel intermediaries. Typically, these Internet travel intermediaries purchase rooms at a negotiated discount from participating hotels, which could result in lower room rates than the franchisor or manager otherwise could have obtained. As these Internet bookings increase, these intermediaries may be

15

able to obtain higher commissions, reduced room rates or other significant contract concessions from us and any hotel management companies that we engage. Moreover, some of these Internet travel intermediaries are attempting to offer hotel rooms as a commodity, by increasing the importance of price and general indicators of quality, such as "three-star downtown hotel," at the expense of brand identification or quality of product or service. If consumers develop brand loyalties to Internet reservations systems rather than to the brands under which our hotels are franchised, the value of our hotels could deteriorate and our business could be materially and adversely affected. Although most of the business for our hotels is expected to be derived from traditional channels, if the amount of sales made through Internet intermediaries increases significantly, room revenues may flatten or decrease and our profitability may be materially and adversely affected.

The need for business-related travel and, thus, demand for rooms in our hotels may be materially and adversely affected by the increased use of business-related technology.

The increased use of teleconference and video-conference technology by businesses could result in decreased business travel as companies increase the use of technologies that allow multiple parties from different locations to participate at meetings without traveling to a centralized meeting location, such as our hotels. To the extent that such technologies play an increased role in day-to-day business and the necessity for business-related travel decreases, demand for our hotel rooms may decrease and we could be materially and adversely affected.

Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand.

Previous terrorist attacks and subsequent terrorist alerts have adversely affected the U.S. travel and hospitality industries over the past several years, often disproportionately to the effect on the overall economy. The impact that terrorist attacks in the U.S. or elsewhere could have on domestic and international travel and our business in particular cannot be determined but any such attacks or the threat of such attacks could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and our results of operations and financial condition.

The outbreak of influenza or other widespread contagious disease could reduce travel and adversely affect hotel demand.

The widespread outbreak of infectious or contagious disease in the U.S. could reduce travel and adversely affect the hotel industry generally and our business in particular.

RISKS RELATED TO OUR BUSINESS AND OPERATIONS

We face risks associated with the use of debt, including refinancing risk.

At December 31, 2013, we had outstanding long-term debt of $819.3 million. We may borrow additional amounts from the same or other lenders in the future. Some of these additional borrowings may be secured by our hotels. Our declaration of trust (as amended and restated, our “Declaration of Trust”) does not limit the amount of indebtedness we may incur. We cannot assure you that we will be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our hotels to foreclosure. Our indebtedness contains various financial and non-financial events of default covenants customarily found in financing arrangements. Our mortgages payable typically require that specified debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, the lender may be able to escrow cash flow from the applicable hotels.

There is also a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of the existing debt. If principal payments due at maturity cannot be refinanced, extended or repaid with proceeds from other sources, such as new equity capital or sales of properties, we may be forced to use operating income to repay such indebtedness, which would have a material adverse effect on our cash available for distribution in years when significant “balloon” payments come due. In some such cases, we may lose the applicable hotels to foreclosure. This risk is particularly significant. See Item 7A of this Annual Report on Form 10-K for a detailed schedule of debt principal repayments.

We face high levels of competition for the acquisition of hotel properties and other assets, which may impede our ability to make future acquisitions or may increase the cost of these acquisitions.

We face competition for investment opportunities in high quality, upper-upscale, upscale and mid-scale limited service and extended-stay hotels from entities organized for purposes substantially similar to our objectives, as well as other purchasers of hotels. We compete for such investment opportunities with entities that have substantially greater financial resources than we do, including access to capital or better relationships with franchisors, sellers or lenders. Our competitors may generally be able to accept more risk than we can manage prudently and may be able to borrow the funds needed to acquire hotels on more favorable terms. Competition may generally reduce the number of suitable investment opportunities offered to us and increase the bargaining power of property owners seeking to sell.

16

We do not operate our hotels and, as a result, we do not have complete control over implementation of our strategic decisions.

In order for us to satisfy certain REIT qualification rules, we cannot directly or indirectly operate or manage any of our hotels. Instead, we must engage an independent management company to operate our hotels. As of December 31, 2013, our TRSs and our joint venture partnerships have engaged independent management companies as the property managers for all of our wholly owned hotels leased to our TRSs and the respective hotels for the joint ventures, as required by the REIT qualification rules. The management companies operating the hotels make and implement strategic business decisions with respect to these hotels, such as decisions with respect to the repositioning of a franchise or food and beverage operations and other similar decisions. Decisions made by the management companies operating the hotels may not be in the best interests of a particular hotel or of the Company. Accordingly, we cannot assure you that the management companies will operate our hotels in a manner that is in our best interests. In addition, the financial condition of the management companies could impact their future ability to operate our hotels.

Our acquisitions may not achieve expected performance, which may harm our financial condition and operating results.

We anticipate that acquisitions will largely be financed with the net proceeds of securities offerings and through externally generated funds such as borrowings under our revolving credit facility and other secured and unsecured debt financing. Acquisitions entail risks that investments will fail to perform in accordance with expectations and that estimates of the cost of improvements necessary to acquire and market properties will prove inaccurate, as well as general investment risks associated with any new real estate investment. As a result, we may not be able to generate enough cash from these hotels to make debt service payments or pay operating expenses.

Acquisition of hotels with limited operating history may not achieve desired results.

Many of our recent acquisitions are newly-developed hotels. Newly-developed or newly-renovated hotels do not have the operating history that would allow our management to make pricing decisions in acquiring these hotels based on historical performance. The purchase prices of these hotels are based upon management’s expectations as to the operating results of such hotels, subjecting us to risks that such hotels may not achieve anticipated operating results or may not achieve these results within anticipated time frames. As a result, we may not be able to generate enough cash flow from these hotels to make debt payments or pay operating expenses. In addition, room revenues may be less than that required to provide us with our anticipated return on investment. In either case, the amounts available for distribution to our shareholders could be reduced.

We may be unable to integrate acquired hotels into our operations or otherwise manage our planned growth, which may adversely affect our operating results.

We have recently acquired several hotels. We cannot assure you that we or HHMLP will be able to adapt our management, administrative, accounting and operational systems and arrangements, or hire and retain sufficient operational staff to successfully integrate these investments into our portfolio and manage any future acquisitions of additional assets without operational disruptions or unanticipated costs. Acquisition of hotels generates additional operating expenses that we will be required to pay. As we acquire additional hotels, we will be subject to the operational risks associated with owning new lodging properties. Our failure to integrate successfully any future acquisitions into our portfolio could have a material adverse effect on our results of operations and financial condition and our ability to pay dividends to shareholders or make other payments in respect of securities issued by us.

Most of our hotels are located in the Eastern United States and many are located in the area from Washington, DC to Boston, MA, which may increase the effect of any regional or local economic conditions.

Most of our hotels are located in the area from Washington, DC to Boston, MA. As a result, regional or localized adverse events or conditions, such as an economic recession, could have a significant adverse effect on our operations, and ultimately on the amounts available for distribution to shareholders.

Our ownership of hotels in the New York City market exposes us to concentration risk, which may lead to increased volatility in our results of operations.

As of December 31, 2013, our consolidated portfolio of hotels in New York City have accounted for approximately 47% of our hotel operating revenues. The operations of our consolidated portfolio of hotels in New York City will have a material impact on our overall results of operations. Concentration risk with respect to our ownership of hotels in the New York City market may lead to increased volatility in our overall results of operations. Our overall results of operations may be adversely affected and our ability to pay distributions to our shareholders could be negatively impacted in the event:

17

downturns in lodging fundamentals are more severe or prolonged in New York City compared to the United States as a whole;

negative economic conditions are more severe or prolonged in New York City compared to other areas, due to concentration of the financial industry in New York or otherwise;

we adopt an unsuccessful strategy to ramp up and stabilize operations at our newly acquired New York hotels; or

New York City is impacted by other unforeseen events beyond our control, including, among others, terrorist attacks and travel related health concerns including pandemics and epidemics.

We own a limited number of hotels and significant adverse changes at one hotel may impact our ability to make distributions to shareholders.

As of December 31, 2013, our portfolio consisted of 48 wholly-owned limited and full service properties and joint venture investments in six hotels with a total of 8,389 rooms. However, certain larger hotels or hotels in certain locations disproportionately impact our performance. Accordingly, significant adverse changes in the operations of any one of these hotels could have a material adverse effect on our financial performance and on our ability to make expected distributions to our shareholders.

We focus on acquiring hotels operating under a limited number of franchise brands, which creates greater risk as the investments are more concentrated.

We place particular emphasis in our acquisition strategy on hotels similar to our current hotels. We invest in hotels operating under a few select franchises and therefore will be subject to risks inherent in concentrating investments in a particular franchise brand, which could have an adverse effect on amounts available for distribution to shareholders. These risks include, among others, the risk of a reduction in hotel revenues following any adverse publicity related to a specific franchise brand or the failure of the franchisor to maintain a certain brand.

We depend on key personnel.

We depend on the services of our existing senior management team, including Jay H. Shah, Neil H. Shah, Ashish R. Parikh and Michael R. Gillespie, to carry out our business and investment strategies. As we expand, we will continue to need to attract and retain qualified additional senior management. We have employment agreements with certain of our senior management; however, the employment agreements may be terminated under certain circumstances. The termination of an employment agreement and the loss of the services of any of our key management personnel, or our inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.

We engage in hedging transactions to limit our exposure to fluctuations in interest rates, which can limit our gains and increase exposure to losses.

We enter into hedging transactions intended to protect us from the effects of interest rate fluctuations on floating rate debt and also intended to protect our portfolio of mortgage assets from interest rate and prepayment rate fluctuations. Our hedging transactions may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Hedging activities may not have the desired beneficial impact on our results of operations or financial condition. No hedging activity can completely insulate us from the risks associated with changes in interest rates and prepayment rates. Moreover, interest rate hedging could fail to protect us or could adversely affect our operating results because, among other things:

Available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought;

The duration of the hedge may not match the duration of the related liability;

The party at risk in the hedging transaction may default on its obligation to pay;

The credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; and

The value of derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value.

Hedging transactions may reduce our shareholders’ equity.

Hedging involves risk and typically involves costs, including transaction costs, which may reduce returns on our investments. These costs increase as the period covered by the hedging increases and during periods of rising and volatile interest rates. These costs will also limit the amount of cash available for distribution to shareholders. The REIT qualification rules may also limit our ability to enter into hedging transactions. We generally intend to hedge as much of our interest rate risk as our management determines is in our best interests given the cost of such hedging transactions and the requirements

18

applicable to REITs. If we are unable to hedge effectively because of the cost of such hedging transactions or the limitations imposed by the REIT rules, we will face greater interest risk exposure than may be commercially prudent.

We and our hotel managers rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

We and our hotel managers rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data. We and our hotel managers purchase some of our information technology from vendors, on whom our systems depend. We and our hotel managers rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information, such as individually identifiable information, including information relating to financial accounts. Although we and our hotel managers have taken steps we believe are necessary to protect the security of our information systems and the data maintained in those systems, it is possible that the safety and security measures taken will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations.

RISKS RELATED TO REAL ESTATE INVESTMENT GENERALLY

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

Real estate investments are relatively illiquid. Our ability to vary our portfolio in response to changes in operating, economic and other conditions will be limited. No assurances can be given that the fair market value of any of our hotels will not decrease in the future.

If we suffer losses that are not covered by insurance or that are in excess of our insurance coverage limits, we could lose investment capital and anticipated profits.

We require comprehensive insurance to be maintained on each of the our hotels, including liability and fire and extended coverage in amounts sufficient to permit the replacement of the hotel in the event of a total loss, subject to applicable deductibles. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes and acts of terrorism that may be uninsurable or not economically insurable. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impracticable to use insurance proceeds to replace the applicable hotel after such applicable hotel has been damaged or destroyed. Under such circumstances, the insurance proceeds received by us might not be adequate to restore our economic position with respect to the applicable hotel. If any of these or similar events occur, it may reduce the return from the attached property and the value of our investment.

Real estate is subject to property taxes.

Each hotel is subject to real and personal property taxes. The real and personal property taxes on hotel properties in which we invest may increase as property tax rates change and as the properties are assessed or reassessed by taxing authorities. Many state and local governments are facing budget deficits that have led many of them, and may in the future lead others to, increase assessments and/or taxes. If property taxes increase, our operating results may be negatively affected.

Environmental matters could adversely affect our results.

Operating costs may be affected by the obligation to pay for the cost of complying with existing environmental laws, ordinances and regulations, as well as the cost of future legislation. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The cost of complying with environmental laws could materially adversely affect amounts available for distribution to shareholders. Phase I environmental assessments have been obtained on all of our hotels. Nevertheless, it is possible that these reports do not reveal all environmental liabilities or that there are material environmental liabilities of which we are unaware.

19

Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of mold to which hotel guests or employees could be exposed at any of our properties could require us to undertake a remediation program to contain or remove the mold from the affected property, which could be costly. In addition, exposure to mold by guests or employees, management company employees or others could expose us to liability if property damage or health concerns arise.

Costs associated with complying with the ADA may adversely affect our financial condition and operating results.

Under the ADA, all public accommodations are required to meet certain federal requirements related to access and use by disabled persons. While we believe that our hotels are substantially in compliance with these requirements, a determination that we are not in compliance with the ADA could result in imposition of fines or an award of damages to private litigants. In addition, changes in governmental rules and regulations or enforcement policies affecting the use and operation of the hotels, including changes to building codes and fire and life-safety codes, may occur. If we were required to make substantial modifications at the hotels to comply with the ADA or other changes in governmental rules and regulations, our ability to make expected distributions to our shareholders could be adversely affected.

RISKS RELATED TO CONFLICTS OF INTEREST

Due to conflicts of interest, many of our existing agreements may not have been negotiated on an arm’s-length basis and may not be in our best interest.

Some of our officers and trustees have ownership interests in HHMLP and in entities with which we have entered into transactions, including hotel acquisitions and dispositions and certain financings. Consequently, the terms of our agreements with those entities, including hotel contribution or purchase agreements, the Option Agreement between our operating partnership and some of the trustees and officers and our property management agreements with HHMLP may not have been negotiated on an arm’s-length basis and may not be in the best interest of all our shareholders. Transactions with related persons must be approved by a majority of the Company’s independent trustees. The Board of Trustee’s policy requires any independent trustee with a direct or indirect interest in the transaction to excuse himself from any consideration of the related person transaction in which he has an interest.

Conflicts of interest with HHMLP may result in decisions that do not reflect our best interests.

Wehaveenteredintoanoptionagreement (the “Option Agreement”)witheachofourofficersandcertaintrusteessuchthat  weobtainarightoffirst refusaltopurchaseanyhotelownedordevelopedinthefuturebytheseindividualsorentitiescontrolledbythematfairmarket value.Thisrightoffirstrefusalwouldapplytoeachpartyuntiloneyearaftersuchpartyceasestobeanofficerortrusteeofthe Company.OurAcquisitionCommitteeoftheBoardofTrusteesiscomprisedsolelyofindependenttrustees,andthepurchase  pricesandallmaterialtermsofthepurchaseofhotelsfromrelatedpartiesareapprovedbytheAcquisitionCommittee.

The following officers and trustees own collectively approximately 37% of HHMLP: Hasu P. Shah, Jay H. Shah, Neil H. Shah, David L. Desfor and Kiran P. Patel. Conflicts of interest may arise with respect to the ongoing operation of our hotels including, but not limited to, the enforcement of the contribution and purchase agreements, the Option Agreement and our property management agreements with HHMLP. These officers and trustees also make decisions for our company with respect to property management. Consequently, these officers and trustees may not act solely in the best interests of our shareholders relating to property management by HHMLP.

Conflicts of interest relating to sales or refinancing of hotels acquired from some of our trustees and officers may lead to decisions that are not in our best interest.

Some of our non-independent trustees and officers have unrealized gains associated with their interests in the hotels we have acquired from them and, as a result, any sale of these hotels or refinancing or prepayment of principal on the indebtedness assumed by us in purchasing these hotels may cause adverse tax consequences to such trustees and officers. Therefore, our interests and the interests of these individuals may be different in connection with the disposition or refinancing of these hotels.

20

Competing hotels owned or acquired by some of our trustees and officers may hinder these individuals from spending adequate time on our business.

Some of our trustees and officers own hotels and may develop or acquire new hotels, subject to certain limitations. Such ownership, development or acquisition activities may materially affect the amount of time these officers and trustees devote to our affairs. Some of our trustees and officers operate hotels that are not owned by us, which may materially affect the amount of time that they devote to managing our hotels. Pursuant to the Option Agreement, as amended, we have an option to acquire any hotels developed by our officers and trustees.

RISKS RELATING TO OUR STRUCTURE

There are no assurances of our ability to make distributions in the future.

We intend to pay quarterly dividends and to make distributions to our shareholders in amounts such that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. However, our ability to pay dividends may be adversely affected by the risk factors described in this annual report. All distributions will be made at the discretion of our Board of Trustees and will depend upon our earnings, our financial condition, maintenance of our REIT status and such other factors as our Board of Trustees may deem relevant from time to time. There are no assurances of our ability to pay dividends in the future.

An increase in market interest rates may have an adverse effect on the market price of our securities.

One of the factors that investors may consider in deciding whether to buy or sell our securities is our dividend rate as a percentage of our share or unit price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher dividend or interest rate on our securities or seek securities paying higher dividends or interest. The market price of our common shares likely will be based primarily on the earnings and return that we derive from our investments and income with respect to our properties and our related distributions to shareholders, and not from the market value or underlying appraised value of the properties or investments themselves. As a result, interest rate fluctuations and capital market conditions can affect the market price of our common shares. For instance, if interest rates rise without an increase in our dividend rate, the market price of our common shares could decrease because potential investors may require a higher dividend yield on our common shares as market rates on interest-bearing securities, such as bonds, rise. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay dividends.

Holders of our outstanding preferred shares have dividend, liquidation and other rights that are senior to the rights of the holders of our common shares.

Our Board of Trustees has the authority to designate and issue preferred shares with liquidation, dividend and other rights that are senior to those of our common shares. As of December 31, 2013, 4,600,000 Series B Preferred Shares and 3,000,000 Series C Preferred Shares were issued and outstanding. Holders of our outstanding preferred shares are entitled to cumulative dividends before any dividends may be declared or set aside on our common shares. Upon our voluntary or involuntary liquidation, dissolution or winding up, before any payment is made to holders of our common shares, holders of our preferred shares are entitled to receive a liquidation preference of $25.00 per share plus any accrued and unpaid distributions. This will reduce the remaining amount of our assets, if any, available to distribute to holders of our common shares. In addition, holders of our preferred shares have the right to elect two additional trustees to our Board of Trustees whenever dividends are in arrears in an aggregate amount equivalent to six or more quarterly dividends, whether or not consecutive.

Future offerings of equity securities, which would dilute our existing shareholders and may be senior to our common shares for the purposes of dividend distributions, may adversely affect the market price of our common shares.

In the future, we may attempt to increase our capital resources by making additional offerings of equity securities, including classes of preferred or common shares. Upon liquidation, holders of our preferred shares and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common shares. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common shares, or both. Our preferred shares, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a dividend distribution to the holders of our common shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk of our future offerings reducing the market price of our common shares and diluting their share holdings in us.

21

We may change our distribution policy in the future.

In the past we have reduced the quarterly distributions paid to our shareholders, and we may reduce or eliminate the quarterly distribution paid to our shareholders in the future. The decision to declare and pay distributions on our common shares in the future, as well as the timing, amount and composition of any such future distributions, will be at the sole discretion of our board of trustees and will depend on our earnings, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness and preferred shares, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, state law and such other factors as our board of trustees deems relevant. Any change in our distribution policy could have a material adverse effect on the market price of our common shares.

The market price of our securities could be volatile and could decline, resulting in a substantial or complete loss of your investment in our securities.

The stock markets have experienced significant price and volume fluctuations in the recent past. As a result, the market price of our securities has been and could be similarly volatile in the future, and investors in our securities may experience a decrease in the value of their investments, including decreases unrelated to our operating performance or prospects. The market price of our securities could be subject to wide fluctuations in response to a number of factors, including:

our operating performance and the performance of other similar companies;

actual or anticipated differences in our operating results;

changes in our revenues or earnings estimates or recommendations by securities analysts; publication of research reports about us or our industry by securities analysts;

additions and departures of key personnel;

strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

the passage of legislation or other regulatory developments that adversely affect us or our industry;

speculation in the press or investment community; actions by institutional shareholders;

changes in accounting principles;

terrorist acts; and

general market conditions, including factors unrelated to our performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.

Future sales of our common shares or securities convertible into or exchangeable or exercisable for our commons shares could depress the market price of our common shares.

We cannot predict whether future sales of our common shares or securities convertible into or exchangeable or exercisable for our commons shares or the availability of these securities for resale in the open market will decrease the market price of our common shares. Sales of a substantial number of these securities in the public market, including sales upon the redemption of Common Units held by the limited partners of our operating partnership, (other than us and our subsidiaries) or the perception that these sales might occur, may cause the market price of our common shares to decline and you could lose all or a portion of your investment.

Future issuances of our common shares or other securities convertible into or exchangeable or exercisable for our common shares, including, without limitation, operating Common Units, in connection with property, portfolio or business acquisitions and issuances of equity-based awards to participants in our equity incentive plans, could have an adverse effect on the market price of our common shares. Future issuances of these securities also could adversely affect the terms upon which we obtain additional capital through the sale of equity securities. In addition, future sales or issuances of our common shares may be dilutive to existing shareholders.

Our Board of Trustees may issue additional shares that may cause dilution or prevent a transaction that is in the best interests of our shareholders.

Our Declaration of Trust authorizes the Board of Trustees, without shareholder approval, to:

amend the Declaration of Trust to increase or decrease the aggregate number of shares of beneficial interest or the number of shares of beneficial interest of any class or series that we have the authority to issue;

cause us to issue additional authorized but unissued common shares or preferred shares; or

classify or reclassify any unissued common or preferred shares and to set the preferences, rights and other terms of such

22

classified or reclassified shares, including the issuance of additional common shares or preferred shares that have preference rights over the common shares with respect to dividends, liquidation, voting and other matters.

Any one of these events could cause dilution to our common shareholders, delay, deter or prevent a transaction or a change in control that might involve a premium price for the common shares or otherwise not be in the best interest of holders of common shares.

Our Declaration of Trust contains a provision that creates staggered terms for our Board of Trustees.

Our Board of Trustees is divided into two classes, the terms of which expire every two years. Trustees of each class are elected for two-year terms upon the expiration of their current terms and each year one class of trustees will be elected by the shareholders. The staggered terms of trustees may delay, deter or prevent a tender offer, a change in control of us or other transaction, even though such a transaction might be in the best interest of the shareholders.

Certain provisions of Maryland law may discourage a third party from acquiring us.

Under the Maryland General Corporation Law, as amended (MGCL), as applicable to REITs, certain “business combinations” (including certain issuances of equity securities) between a Maryland REIT and any person who beneficially owns ten percent or more of the voting power of the trust’s shares, or an affiliate thereof, are prohibited for five years after the most recent date on which such shareholder acquired at least ten percent of the voting power of the trust’s shares. Thereafter, any such business combination must be approved by two super-majority shareholder votes unless, among other conditions, the trust’s common shareholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares. These provisions could delay, deter or prevent a change of control or other transaction in which holders of our equity securities might receive a premium for their shares above then-current market prices or which such shareholders otherwise might believe to be in their best interests.

Our Board of Trustees may change our investment and operational policies without a vote of the common shareholders.

Our major policies, including our policies with respect to acquisitions, financing, growth, operations, debt limitation and distributions, are determined by our Board of Trustees. The Trustees may amend or revise these and other policies from time to time without a vote of the holders of the common shares.

Our Board of Trustees and management make decisions on our behalf, and shareholders have limited management rights.

Our shareholders have no right or power to take part in our management except through the exercise of voting rights on certain specified matters. The board of trustees is responsible for our management and strategic business direction, and our management is responsible for our day-to-day operations. Certain policies of our board of trustees may not be consistent with the immediate best interests of our shareholders.

23

RISKS RELATED TO OUR TAX STATUS

If we fail to qualify as a REIT, our dividends will not be deductible to us, and our income will be subject to taxation, which would reduce the cash available for distribution to our shareholders.

We have operated and intend to continue to operate so as to qualify as a REIT for federal income tax purposes. However, the federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing REITs are limited. Our continued qualification as a REIT will depend on our continuing ability to meet various requirements concerning, among other things, the ownership of our outstanding shares of beneficial interest, the nature of our assets, the sources of our income, and the amount of our distributions to our shareholders. Moreover, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. If we were to fail to qualify as a REIT in any taxable year and did not qualify for certain statutory relief provisions, we would not be allowed a deduction for distributions to our shareholders in computing our taxable income and would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the value of, and trading prices for, our shares. Unless entitled to relief under certain Code provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. As a result, amounts available for distribution to shareholders would be reduced for each of the years involved. Although we currently intend to continue to operate in a manner so as to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Trustees, with the consent of holders of two-thirds of the outstanding shares, to revoke our REIT election.

Failure to make required distributions would subject us to tax, which would reduce the cash available for distribution to our shareholders.

In order to qualify as a REIT, each year we must distribute to our shareholders at least 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding net capital gain. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our actual distributions in any year are less than the sum of:

85% of our REIT ordinary income for that year;

95% of our REIT capital gain net income for that year; and

100% of our undistributed taxable income required to be distributed from prior years.

We have distributed, and intend to continue to distribute, our taxable income to our shareholders in a manner intended to satisfy the 90% distribution requirement and to avoid corporate income tax and the 4% nondeductible excise tax. Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% nondeductible excise tax in a particular year. In the past we have borrowed, and in the future we may borrow, to pay distributions to our shareholders and the limited partners of our operating partnership. Such borrowings subject us to risks from borrowing as described herein. Additionally, we may, if necessary and allowable, pay taxable dividends of our shares or debt securities to meet the distribution requirements.

If the leases of our hotels to our TRSs are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” Rents paid to our operating partnership by our TRSs pursuant to the lease of our hotels constitute substantially all of our gross income. In order for such rent to qualify as “rents from real property” for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100 percent penalty tax on certain income or deductions if those transactions are not conducted on arm's-length terms.

A REIT may own up to 100 percent of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross operating income from hotel operations pursuant to hotel management contracts. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A

24

corporation of which a TRS directly or indirectly owns more than 35 percent of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25 percent of the value of a REIT's assets may consist of stock or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100 percent excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-length basis.

Our TRSs are subject to applicable federal, foreign, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but is not required to be distributed to us. We believe that the aggregate value of the stock and securities of our TRSs is and will continue to be less than 25 percent of the value of our total assets (including our TRS stock and securities). Furthermore, we will monitor the value of our respective investments in our TRSs for the purpose of ensuring compliance with TRS ownership limitations. In addition, we will scrutinize all of our transactions with our TRSs to ensure that they are entered into on arm's-length terms to avoid incurring the 100 percent excise tax described above. There can be no assurance, however, that we will be able to comply with the 25 percent limitation discussed above or to avoid application of the 100 percent excise tax discussed above.

If our hotel managers do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT.

Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. We lease our hotels to our TRSs. A TRS will not be treated as a “related party tenant,” and will not be treated as directly operating a lodging facility, which is prohibited, to the extent the TRS leases properties from us that are managed by an “eligible independent contractor.”

We believe that the rent paid by our TRSs is qualifying income for purposes of the REIT gross income tests and that our TRSs qualify to be treated as taxable REIT subsidiaries for federal income tax purposes, but there can be no assurance that the IRS will not challenge this treatment or that a court would not sustain such a challenge. If the IRS successfully challenged this treatment, we would likely fail to satisfy the asset tests applicable to REITs and substantially all of our income would fail to qualify for the gross income tests. If we failed to satisfy either the asset or gross income tests, we would likely lose our REIT qualification for federal income tax purposes, unless certain relief provisions applied.

If our hotel managers do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT. Each of the hotel management companies that enters into a management contract with our TRSs must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRSs to be qualifying income for our REIT income test requirements. Among other requirements, in order to qualify as an eligible independent contractor a manager must not own more than 35% of our outstanding shares (by value) and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the manager, taking into account only owners of more than 5% of our shares and, with respect to ownership interests in such managers that are publicly traded, only holders of more than 5% of such ownership interests. Complex ownership attribution rules apply for purposes of these 35% thresholds. Although we intend to continue to monitor ownership of our shares by our hotel managers and their owners, there can be no assurance that these ownership levels will not be exceeded.

The federal income tax laws governing REITs are complex.

We intend to continue to operate in a manner that will qualify us as a REIT under the federal income tax laws. The REIT qualification requirements are extremely complex, however, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we will be successful in operating so we can continue to qualify as a REIT. At any time, new laws, interpretations, or court decisions may change the federal tax laws or the federal income tax consequences of our qualification as a REIT.

Complying with REIT requirements may force us to sell otherwise attractive investments.

To qualify as a REIT, we must satisfy certain requirements with respect to the character of our assets. If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter (by, possibly, selling assets notwithstanding their prospects as an investment) to avoid losing our REIT status. If we fail to comply with these requirements at the end of any calendar quarter, and the failure exceeds a de minimis threshold, we may be able to preserve our REIT status if (a) the failure was due to reasonable cause and not to willful neglect, (b) we dispose of the assets causing the failure within six months after the last day of the quarter in which we identified the failure, (c) we file a schedule with the Internal Revenue Service, or IRS, describing each asset that caused the failure, and (d) we pay an additional tax of the greater of $50,000 or the product of the highest applicable tax rate multiplied by the net income generated on those assets. As a result, we may be required to liquidate otherwise attractive investments.

25

The prohibited transactions tax may limit our ability to engage in transactions, including dispositions of assets that would be treated as sales for federal income tax purposes.

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax upon a disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of real property or may conduct such sales through a TRS.

We may pay taxable dividends partly in shares and partly in cash, in which case shareholders may sell our shares to pay tax on such dividends, placing downward pressure on the market price ofour shares.

We may make taxable dividends that are payable partly in cash and partly in shares. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in shares as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for federal income tax purposes. Those rulings may be relied upon only by the taxpayers to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS issued a revenue procedure creating a temporary safe harbor that authorized publicly traded REITs to make elective cash/stock dividends, but that temporary safe harbor has expired. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and shares. Although we have no current intention of paying dividends in our own shares, if in the future we choose to pay dividends in our own shares, our shareholders may be required to pay tax in excess of the cash that they receive. If a U.S. shareholder sells the shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our shares at the time of the sale. Furthermore, with respect to certain non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in shares. If we pay dividends in our own shares and a significant number of our shareholders determine to sell our shares in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our shares.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The tax rate applicable to “qualified dividend income” payable to domestic stockholders taxed at individual rates may be 20% or lower. Dividends payable by REITs, however, generally are not eligible for the reduced rates or qualified dividend income. Although this legislation does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common shares.

Our share ownership limitation may prevent certain transfers of our shares.

In order to maintain our qualification as a REIT, not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities). Our Declaration of Trust prohibits direct or indirect ownership (taking into account applicable ownership provisions of the Internal Revenue Code) of more than (a) 9.9% of the aggregate number of outstanding common shares of any class or series or (b) 9.9% of the aggregate number of outstanding preferred shares of any class or series of outstanding preferred shares by any shareholder or group, or the Ownership Limitation. Generally, the shares of beneficial interest owned by related owners will be aggregated for purposes of the Ownership Limitation. The ownership limitation could have the effect of delaying, deterring or preventing a change in control or other transaction in which holders of shares might receive a premium for their shares over the then prevailing market price or which such holders might believe to be otherwise in their best interests. Any transfer of shares of beneficial interest that would violate the Ownership Limitation, cause us to have fewer than 100 shareholders, cause us to be “closely held” within the meaning of Section 856(h) of the Code or cause us to own, directly or indirectly, 10% or more of the ownership interest in any tenant (other than a TRS) will be void, the intended transferee of such shares will be deemed never to have had an interest in such shares, and such shares will be designated “shares-in-trust.” Further, we will be deemed to have been offered shares-in-trust for purchase at the lesser of the market price (as defined in the Declaration of Trust) on the date we accept the offer and the price per share in the transaction that created such shares-in-trust (or, in the case of a gift, devise or non-transfer event (as defined in the Declaration of Trust), the market price on the date of such gift, devise or non-transfer event). Therefore, the holder of shares of beneficial interest in excess of the Ownership Limitation will experience a financial loss when such shares are purchased by us, if the market price falls between the date of purchase and the date of redemption.

26

We have, in limited instances from time to time, permitted certain owners to own shares in excess of the Ownership Limitation. The Board of Trustees has waived the Ownership Limitation for such owners after following procedures set out in our Declaration of Trust, under which the owners requesting the waivers provided certain information and our counsel provided certain legal opinions. These waivers established levels of permissible share ownership for the owners requesting the waivers that are higher than the Ownership Limitation. If the owners acquire shares in excess of the higher limits, those shares are subject to the risks described above in the absence of further waivers. The Board of Trustees is not obligated to grant such waivers and has no current intention to do so with respect to any owners who (individually or aggregated as the Declaration of Trust requires) do not currently own shares in excess of the Ownership Limitation.

27

Item 1B. Unresolved Staff Comments

None.

28

Item 2. Properties

The following table sets forth certain information with respect to the 48 hotels we wholly owned as of December 31, 2013, all of which are consolidated on the Company’s financial statements.

Market	Name	Location	Year Opened	Number of Rooms
Boston Urban and Metro	Courtyard	Brookline/Boston, MA*	2003	188
	Hawthorn Suites by Wyndham	Franklin, MA	1999	100
	Holiday Inn Express	Cambridge, MA	1997	112
	Residence Inn	Framingham, MA	2000	125
	Residence Inn	Norwood, MA	2006	96
	The Boxer	Boston, MA	2004	80
California - Arizona	Courtyard	San Diego, CA	1999	245
	Courtyard	Los Angeles, CA	2008	260
	Hyatt House	Pleasant Hill, CA	2003	142
	Hyatt House	Pleasanton, CA	1998	128
	Hyatt House	Scottsdale, AZ	1999	164
Miami	Blue Moon	Miami, FL	2013	75
	Courtyard	Miami, FL	2004	259
	Residence Inn	Coconut Grove, FL	2000	140
	Winter Haven	Miami, FL	2013	70
NYC Urban	Candlewood Suites	Times Square, NY	2009	188
	Duane Street	TriBeCa, NY	2008	43
	Hampton Inn	Chelsea/Manhattan, NY	2003	144
	Hampton Inn	Herald Square, Manhattan, NY	2005	136
	Hampton Inn	Seaport, NY	2006	65
	Hampton Inn	Times Square, NY	2009	184
	Hampton Inn	Pearl Street, Manhattan, NY	2012	81
	Hilton Garden Inn	JFK Airport, NY*	2005	192
	Hilton Garden Inn	TriBeCa, NY	2009	151
	Holiday Inn	Wall Street, NY	2010	113
	Holiday Inn Express	Times Square, NY	2009	210
	Holiday Inn Express	Water Street, Manhattan, NY	2010	112
	Holiday Inn Express	Madison Square Garden, Manhattan, NY	2006	228
	Hotel 373	Fifth Ave, NY	2007	70
	Hyatt	Union Square, NY	2013	178
	Nu Hotel	Brooklyn, NY	2008	93
	Sheraton Hotel	JFK Airport, NY*	2008	150
NY-NJ Metro	Holiday Inn Express	Chester, NY	2006	80
	Hyatt House	White Plains, NY	2000	159
	Hyatt House	Bridgewater, NJ**	1998	128

29

Market	Name	Property Name	Year Opened	Number of Rooms
Philadelphia	Courtyard	Langhorne, PA**	2002	118
	Hampton Inn	Philadelphia, PA	2001	250
	Holiday Inn Express	Oxford Valley, PA**	2004	88
	Holiday Inn Express & Suites	King of Prussia, PA**	2004	155
	Hyatt Place	King of Prussia, PA	2010	129
	Sheraton Hotel	New Castle, DE	2011	192
	The Rittenhouse Hotel	Philadelphia, PA	2004	116
Washington D.C.	Courtyard	Alexandria, VA	2006	203
	Hampton Inn	Washington, DC	2005	228
	Hyatt House	Gaithersburg, MD	1998	140
	Residence Inn	Tysons Corner, VA	1984	96
	Residence Inn	Greenbelt, MD	2002	120
	The Capitol Hill Hotel	Washington, DC	2007	152
			TOTAL ROOMS	6,876

*Our interests in these hotels are subject to ground leases which, in most cases, require monthly rental payment as determined by the applicable ground lease agreement. These ground lease agreements typically have terms of between 75 and 99 years.

**These four properties are part of a non-core portfolio for which a purchase and sale agreement was entered into by the Company in September 2013, and closed in the first quarter of 2014. The sale of the other 12 properties subject to this purchase and sale agreement closed in December 2013.

The following table sets forth certain information with respect to the six hotels we owned through unconsolidated joint ventures with third parties as of December 31, 2013.

Market	Name	Location	Year Opened	Number of Rooms	HHLP Ownership in Asset	HHLP Preferred Return
Boston	Courtyard	South Boston, MA***	2005	164	50.0%	N/A
	Holiday Inn Express	South Boston, MA***	1998	118	50.0%	N/A
Connecticut	Courtyard	Norwich, CT	1997	144	66.7%	8.5%
	Hilton	Hartford, CT	2005	393	8.8%	8.5%
	Marriott	Mystic, CT	2001	285	66.7%	8.5%
	Marriott	Hartford, CT	2005	409	15.0%	8.5%
		TOTAL ROOMS		1,513

***The joint ventures interests in these hotels are subject to ground leases which, in most cases, require monthly rental payment as determined by the applicable ground lease agreements. These ground lease agreements typically have terms of between 75 and 99 years.

30

Item 3. Legal Proceedings

We are not presently subject to any material litigation nor, to our knowledge, is any other litigation threatened against us, other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.

Item 4. Mine Safety Disclosures

Not applicable.

31

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET INFORMATION

Our common shares trade on the New York Stock Exchange under the symbol “HT.” As of February 25, 2014, the last reported closing price per common share on the New York Stock Exchange was $5.39.The following table sets forth the high and low sales price per common share reported on the New York Stock Exchange as traded and the dividends paid on the common shares for each of the quarters indicated.

Year Ended December 31, 2013		High		Low		Dividend Per Common Share
Fourth Quarter	$	5.94	$	5.33	$	0.06
Third Quarter	$	6.21	$	5.18	$	0.06
Second Quarter	$	6.24	$	5.27	$	0.06
First Quarter	$	6.30	$	5.07	$	0.06
Year Ended December 31, 2012		High		Low		Dividend Per Common Share
Fourth Quarter	$	5.11	$	4.19	$	0.06
Third Quarter	$	5.71	$	4.66	$	0.06
Second Quarter	$	5.91	$	4.74	$	0.06
First Quarter	$	5.64	$	4.76	$	0.06

SHAREHOLDER INFORMATION

At December 31, 2013 we had approximately 118 shareholders of record of our common shares. Common Units (which are redeemable by holders for cash or, at our option, for common shares on a one for one basis, subject to certain limitations) were held by approximately 38 entities and persons, including our company.

Our Declaration of Trust, subject to certain exceptions, provides that no person may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.9% of the number of outstanding common shares of any class or series of common shares or the number of outstanding preferred shares of any class or series of preferred shares. For this purpose, a person includes a “group” and a “beneficial owner” as those terms are used for purposes of Section 13(d)(3) of the Exchange Act. Any transfer of common or preferred shares that would result in any person owning, directly or indirectly, common or preferred shares in excess of the ownership limitation, result in the common and preferred shares being owned by fewer than 100 persons (determined without reference to any rules of attribution), result in our being “closely held” within the meaning of Section 856(h) of the Code, or cause us to own, actually or constructively, 10% or more of the ownership interests in a tenant (other than a TRS) of our or our operating partnership’s real property, within the meaning of Section 856(d)(2)(B) of the Code, will be null and void, and the intended transferee will acquire no rights in such common or preferred shares.

Any person who acquires or attempts to acquire common or preferred shares in violation of the foregoing restrictions, or any person who owned common or preferred shares that were transferred to a trust, will be required to give written notice immediately to us of such event and provide us with such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT.

In addition, the trustees, upon receipt of advice of counsel or other evidence satisfactory to the trustees, in their sole and absolute discretion, may, in their sole and absolute discretion, exempt a person from the ownership limitation under certain circumstances. The foregoing restrictions continue to apply until the trustees determine that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT and there is an affirmative vote of two-thirds of the number of common and preferred shares entitled to vote on such matter at a regular or special meeting of our shareholders.

All certificates representing common or preferred shares bear a legend referring to the restrictions described above.

32

The restrictions on ownership and transfer described above could have the effect of delaying, deterring or preventing a change in control or other transaction in which holders of some, or a majority, of our common shares might receive a premiumfor their shares over the then-prevailing market price or which such holders might believe to be otherwise in their best interest.

EQUITY COMPENSATION PLAN

See Part III, Item 12, for a description of securities authorized for issuance under our 2012 Equity Incentive Plan.

DISTRIBUTION INFORMATION

Future distributions, if any, will be at the discretion of our Board of Trustees and will depend on our actual cash flow, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as we may deem relevant. Our ability to make distributions will depend on our receipt of distributions from our operating partnership and lease payments from our lessees with respect to the hotels. We rely on the profitability and cashflows of our hotels to generate sufficient cash flow for distributions. Additionally, we may, if necessary and allowable, pay taxable dividends of our shares or debt securities to meet the distribution requirements.

SHARE PERFORMANCE GRAPH

The following graph compares the yearly change in our cumulative total shareholder return on our common shares for the period beginning December 31, 2008 and ending December 31, 2013, with the yearly changes in the Standard & Poor’s 500 Stock Index (the S&P 500 Index), the Russell 2000 Index, and the SNL Hotel REIT Index (“Hotel REIT Index”) for the same period, assuming a base share price of $100.00 for our common shares, the S&P 500 Index, the Russell 2000 Index and the Hotel REIT Index for comparative purposes. The Hotel REIT Index is comprised of publicly traded REITs which focus on investments in hotel properties. Total shareholder return equals appreciation in stock price plus dividends paid and assumes that all dividends are reinvested. The performance graph is not indicative of future investment performance. We do not make or endorse any predictions as to future share price performance.

		2008		2009		2010		2011		2012		2013
Hersha Hospitality Trust	$	100.00	$	104.67	$	220.00	$	162.67	$	166.67	$	185.67
Russell 2000		100.00		125.22		156.90		148.35		170.06		232.98
Hotel REIT Index		100.00		163.13		225.86		191.77		210.14		257.04
S&P 500		100.00		123.45		139.23		139.23		157.90		204.63

33

Item 6. Selected Financial Data

The following sets forth selected financial and operating data on a historical consolidated basis. The following data should be read in conjunction with the financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K. Where applicable, the operating results of certain real estate assets which have been sold or otherwise qualify as held for disposition are included in discontinued operations for all periods presented.

HERSHA HOSPITALITY TRUST

SELECTED FINANCIAL DATA

(In thousands, except per share data)

		2013		2012		2011		2010		2009
Revenue:
Hotel Operating Revenues	$	338,064	$	299,005	$	229,156	$	184,998	$	128,461
Interest Income From Development Loans		158		1,998		3,427		4,686		7,411
Other Revenues		191		212		330		324		702
Total Revenue		338,413		301,215		232,913		190,008		136,574
Operating Expenses:
Hotel Operating Expenses		188,431		161,982		121,402		98,930		71,735
Gain on Insurance Settlements		(403)		-		-		-		-
Hotel Ground Rent		985		835		877		941		733
Real Estate and Personal Property Taxes and Property Insurance		24,083		19,341		15,936		13,738		9,313
General and Administrative (including Share Based Payments of $9,746, $9,678, $7,590, $6,649, $2,143)		24,025		23,455		18,488		16,853		7,485
Acquisition and Terminated Transaction Costs		974		1,179		2,734		4,785		331
Loss from Impairment of Assets		-		-		-		-		21,407
Depreciation and Amortization		55,784		48,243		40,562		34,060		26,284
Gain on Acquistions, Net		(12,096)		-		-		-		-
Total Operating Expenses		281,783		255,035		199,999		169,307		137,288
Operating Income (Loss)		56,630		46,180		32,914		20,701		(714)
Interest Income		1,784		1,311		456		168		207
Interest Expense		39,984		37,295		33,447		32,167		32,403
Other Expense		897		740		1,011		462		164
Loss on Debt Extinguishment		545		3,189		102		852		-
Income (Loss) before (Loss) Income from Unconsolidated Joint Venture Investments and Discontinued Operations		16,988		6,267		(1,190)		(12,612)		(33,074)
(Loss) Income from Unconsolidated Joint Ventures		(22)		(232)		210		(1,751)		(2,649)
Impairment of Investment in Unconsolidated Joint Venture		(1,813)		-		(1,677)		-		(4,541)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Ventures		-		(1,892)		2,757		4,008		1,868
(Loss) Income from Unconsolidated Joint Venture Investments		(1,835)		(2,124)		1,290		2,257		(5,322)
Income (Loss) Before Income Taxes		15,153		4,143		100		(10,355)		(38,396)
Income Tax Benefit		5,600		3,355		-		-		-
Income (Loss) from Continuing Operations		20,753		7,498		100		(10,355)		(38,396)
Discontinued Operations:
Gain on Disposition of Hotel Properties		32,121		11,231		991		347		-
Impairment of Assets Held for Sale		(10,314)		-		(30,248)		(2,433)		(17,703)
Income (Loss) from Discontinued Operations		7,388		3,489		2,189		(4,761)		(2,358)
Income (Loss) from Discontinued Operations		29,195		14,720		(27,068)		(6,847)		(20,061)
Net Income (Loss)		49,948		22,218		(26,968)		(17,202)		(58,457)
(Income) Loss Allocated to Noncontrolling Interests		(335)		158		1,734		845		8,596
Issuance Costs of Redeemed Preferred Stock		(2,250)		-		-		-		-
Preferred Distributions		(14,611)		(14,000)		(10,499)		(4,800)		(4,800)
Net Income (Loss) applicable to Common Shareholders	$	32,752	$	8,376	$	(35,733)	$	(21,157)	$	(54,661)

34

HERSHA HOSPITALITY TRUST

SELECTED FINANCIAL DATA

(In thousands, except per share data)

		2013		2012		2011		2010		2009
Basic Income (Loss) from Continuing Operations applicable to Common Shareholders	$	0.02	$	(0.03)	$	(0.06)	$	(0.11)	$	(0.99)
Diluted Income (Loss) from Continuing Operations applicable to Common Shareholders (1)		0.02		(0.03)		(0.06)		(0.11)		(0.99)
Dividends declared per Common Share		0.24		0.24		0.23		0.20		0.33
Balance Sheet Data
Net investment in hotel properties	$	1,535,835	$	1,466,713	$	1,341,536	$	1,245,851	$	938,954
Assets Held for Sale		56,583		-		93,829		-		21,073
Noncontrolling Interests Common Units		29,523		15,484		16,862		19,410		27,126
Redeemable Noncontrolling Interest		-		15,321		14,955		19,894		14,733
Noncontrolling Interests Consolidated Joint Ventures		-		-		307		474		267
Noncontrolling Interests Consolidated Variable Interest Entity		(342)		476		-		-		-
Shareholder's equity		837,958		829,828		730,673		683,434		302,197
Total assets		1,748,097		1,707,679		1,630,909		1,457,277		1,111,044
Total debt		773,501		792,708		758,374		694,720		724,551
Liabilities related to Assets Held for Sale		45,835		-		61,758		-		20,892
Other Data
Net cash provided by operating activities	$	90,261	$	71,756	$	58,668	$	42,486	$	21,532
Net cash used in investing activities	$	(125,474)	$	(55,817)	$	(230,758)	$	(310,567)	$	(8,921)
Net cash provided by (used in) financing activities	$	2,367	$	28,552	$	131,062	$	322,273	$	(16,904)
Weighted average shares outstanding
Basic		198,390,450		187,415,270		168,753,382		134,370,172		51,027,742
Diluted (1)		201,918,177		187,415,270		168,753,382		134,370,172		51,027,742

(1) Income allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.

35

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements appearing in this Item 7 are forward-looking statements within the meaning of the federal securities laws. Our actual results may differ materially. We caution you not to place undue reliance on any such forward-looking statements. See “CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS” for additional information regarding our forward-looking statements.

BACKGROUND

As of December 31, 2013, we owned interests in 54 hotels in major urban gateway markets including New York, Washington DC, Boston, Philadelphia, San Diego, Los Angeles and Miami, including 48 wholly-owned hotels and interests in six hotels owned through unconsolidated joint ventures. Our "Summary of Operating Results" section below contains operating results for 43 consolidated hotel assets and six hotel assets owned through an unconsolidated joint venture. These results exclude the Hampton Inn Pearl Street, New York, NY, which is currently under redevelopment and is expected to open during the first quarter of 2014. The results below also exclude a portfolio of four non-core hotels, for which a purchase and sale agreement has been entered into and the sale of which is expected to close in the first quarter of 2014. As a result, results for these four non-core hotels are included in discontinued operations.  We have elected to be taxed as a REIT for federal income tax purposes, beginning with the taxable year ended December 31, 1999. For purposes of the REIT qualification rules, we cannot directly operate any of our hotels. Instead, we must lease our hotels to a third party lessee or to a TRS, provided that the TRS engages an eligible independent contractor to manage the hotels. As of December 31, 2013, we have leased all of our hotels to a wholly-owned TRS, a joint venture owned TRS, or an entity owned by our wholly-owned TRS. Each of these TRS entities will pay qualifying rent, and the TRS entities have entered into management contracts with qualified independent managers, including HHMLP, with respect to our hotels. We intend to lease all newly acquired hotels to a TRS. The TRS structure enables us to participate more directly in the operating performance of our hotels. The TRS directly receives all revenue from, and funds all expenses relating to, hotel operations. The TRS is also subject to income tax on its earnings.

OVERVIEW

In 2013, lodging fundamentals for those markets in which we focus, and for our Company in particular, continued to stabilize following the economic recession that began in 2008 and 2009. As we conclude 2013, we believe the improvements in our equity and debt capitalization and repositioning of our portfolio enables us to capitalize on further improvements in lodging fundamentals. We continue to expect improvements in ADR, RevPAR and operating margins, led by hotels in our core urban markets of New York, Boston, Philadelphia, Los Angeles, San Diego and Miami. We also continue to seek acquisition opportunities in urban centers and central business districts. In addition, we will continue to look for attractive opportunities to dispose of properties in secondary and tertiary markets at favorable prices, potentially redeploying that capital in our focus markets. We do not expect to actively pursue acquisitions made through joint ventures in the near term; however, we may seek to buy out, or sell our joint venture interests to, select existing joint venture partners. We do not expect to actively pursue development loans or land leases in the near term. While property joint ventures and development loans played an important role in our growth in the past, we do not expect them to play the same role in our near-term future.

The repositioning of our portfolio, to focus more on high barrier to entry and major urban markets, continued in 2012 and 2013. We acquired seven hotels, including three in Miami, one in San Diego, one in Philadelphia, one in Boston, and one in New York City. During 2012 and 2013, we closed on the sale of 33 wholly owned and 5 joint venture hotels in secondary and tertiary markets that we determined to be non-core. We believe these efforts to reposition our portfolio have yielded positive results in both 2013 and 2012. As shown in the tables below under “Summary of Operating Results,” in 2013, we grew occupancy by approximately110 basis points, ADR by 2.6% and RevPAR by 4.0% across our portfolio of consolidated hotels. Likewise, 2012 resulted in increases in occupancy by 200 basis points, ADR by 5.2% and RevPAR by 7.9% across our portfolio of consolidated hotels.

Although we are planning for continued stabilization and improvement in consumer and commercial spending and lodging demand as we enter 2014, the manner in which the economy will continue to grow, if at all, is not predictable, and certain core economic metrics, including unemployment, are not rebounding as quickly as many had hoped. In addition, the availability for hotel-level financing for the acquisition of new hotels is not recovering as quickly as the economy or broader financial markets. As a result, there can be no assurances that we will be able to grow hotel revenues, occupancy, ADR or RevPAR at our properties as we hope. Factors that might contribute to less than anticipated performance include those described under the heading “Item 1A. Risk Factors” and other documents that we may file with the SEC in the future. We will continue to cautiously monitor recovery in lodging demand and rates, our third party hotel managers and our performance generally.

In October of 2012, our hotels across the eastern seaboard experienced the effects of Hurricane Sandy. Most of our hotels in these markets were able to remain open and continued to serve our guests through the duration of the storm.

36

However, our Holiday Inn Express on Water Street in lower Manhattan experienced flooding and was forced to close. In April 2013, repairs were completed and this hotel was re-opened. Additionally, our hotel re-development project at 32 Pearl Street in lower Manhattan experienced some flooding at the job site and portions of the project suffered damage. The continued strength in business transient and leisure transient customer demand in Manhattan partially offset the losses from the storm.

SUMMARY OF OPERATING RESULTS

The following table outlines operating results for the Company’s portfolio of wholly owned hotels and those owned through joint venture interests (excluding hotel assets classified as discontinued operations and the Hampton Inn Pearl Street, which is a hotel undergoing a re-development project) that are consolidated in our financial statements for the three years ended December 31, 2013, 2012 and 2011.

CONSOLIDATED HOTELS:
	Year Ended 2013		Year Ended 2012		2013 vs. 2012 % Variance	Year Ended 2011		2012 vs. 2011 % Variance
Occupancy		79.7%		78.6%	1.1%		76.6%	2.0%
Average Daily Rate (ADR)	$	179.70	$	175.23	2.6%	$	166.58	5.2%
Revenue Per Available Room (RevPAR)	$	143.30	$	137.78	4.0%	$	127.64	7.9%
Room Revenues	$	309,452	$	273,410	13.2%	$	218,314	25.2%
Hotel Operating Revenues	$	338,064	$	299,005	13.1%	$	229,156	30.5%

RevPAR for the year ended December 31, 2013 increased 4.0% for our consolidated hotels when compared to the same period in 2012. This increase represents a continued growth trend in RevPAR, which is primarily due to the improving economic conditions in 2013 and the acquisition of hotel properties consummated in 2013 that are accretive to RevPAR.

The following table outlines operating results for the three years ended December 31, 2013, 2012 and 2011 for hotels we own through an unconsolidated joint venture interest (excluding those hotel assets have been sold to an independent third party during the period presented). These operating results reflect 100% of the operating results of the property including our interest and the interests of our joint venture partners and other noncontrolling interest holders.

UNCONSOLIDATED JOINT VENTURES:
	Year Ended 2013		Year Ended 2012		2013 vs. 2012 % Variance	Year Ended 2011		2012 vs. 2011 % Variance
Occupancy		68.3%		68.6%	-0.3%		68.3%	0.3%
Average Daily Rate (ADR)	$	154.57	$	152.51	1.4%	$	154.44	-1.2%
Revenue Per Available Room (RevPAR)	$	105.52	$	104.66	0.8%	$	105.48	-0.8%
Room Revenues	$	58,273	$	62,058	-6.1%	$	63,896	-2.9%
Total Revenues	$	80,879	$	84,364	-4.1%	$	85,841	-1.7%

For our unconsolidated hotels, RevPAR for the year ended December 31, 2013 was consistent with RevPAR achieved during the year ended December 31, 2012. The relatively stable results in RevPAR during the year of 2013 when compared to the year of 2012 is primarily the result of joint venture assets that are now consolidated for financial reporting purposes and therefore no longer contribute to the operating results of our portfolio of unconsolidated hotels. Properties such as the Holiday Inn Express 29th Street, New York, NY, which, as of June 18, 2012, is no longer included in our unconsolidated joint ventures, tended to have higher occupancy and ADR than the remaining hotels in our unconsolidated joint venture hotel portfolio, resulting in the lower room revenues and total revenues in the above table. When compared to the same period in 2012, the remaining unconsolidated joint venture hotels follow the same growth trend for RevPAR as experienced in our same store consolidated hotels reported below during the year ended December 31, 2013.

37

We define a same store consolidated hotel as one that is currently consolidated, that we have owned in whole or in part for the entire period being reported and the comparable period in each of the periods being presented, and is deemed fully operational. Based on this definition, for the years ended December 31, 2013 and 2012, there are 34 same store consolidated hotels and 31 same store consolidated hotels for the years ended December 31, 2012 and 2011. The following table outlines operating results for the years ended December 31, 2012, 2011, and 2010, for our same store consolidated hotels:

SAME STORE CONSOLIDATED HOTELS:
	(includes 34 hotels in both years)					(includes 31 hotels in both years)
	Year Ended 2013		Year Ended 2012		2013 vs. 2012 % Variance	Year Ended 2012			Year Ended 2011	2012 vs. 2011 % Variance
Occupancy		80.5%		78.6%	1.9%		80.0%		77.2%	2.8%
Average Daily Rate (ADR)	$	174.65	$	172.67	1.1%	$	175.61	$	169.58	3.6%
Revenue Per Available Room (RevPAR)	$	140.55	$	135.69	3.6%	$	140.45	$	130.99	7.2%
Room Revenues	$	258,047	$	249,848	3.3%	$	227,589	$	211,776	7.5%
Total Revenues	$	272,780	$	263,893	3.4%	$	237,608	$	220,670	7.7%

RevPAR for our same store consolidated hotels increased3.6% for the year ended December 31, 2013 when compared to the same period in 2012. As noted above, this increase represents a continued growth trend in RevPAR, which is primarily due to the improving economic conditions of the markets in which we operatedduring2013. 

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2013 TO DECEMBER 31, 2012

(dollars in thousands, except ADR and per share data)

Revenue

Our total revenues for the years ended December 31, 2013 and 2012 consisted of hotel operating revenues, interest income from our development loan program and other revenue. Hotel operating revenues were approximately 99.9% and 99.3% of total revenues for the years ended December 31, 2013 and 2012, respectively. Hotel operating revenues are recorded for wholly owned hotels that are leased to our wholly owned TRS and hotels owned through joint venture interests that were consolidated in our financial statements during the period. Hotel operating revenues increased $39,059, or 13.1%, from $299,005 for the year ended December 31, 2012 to $338,064 for the same period in 2013. This increase in hotel operating revenues was primarily attributable to the acquisitions consummated in 2013 and 2012 as well as increases in hotel operating revenues for our same store consolidated hotels.

We acquired interests in the following consolidated hotels that contributed the following operating revenues for the year ended December 31, 2013.

Brand	Location	Acquisition Date	Rooms		2013 Hotel Operating Revenues
Hyatt Union Square	New York, NY	April 9, 2013	178	$	11,272
Courtyard by Marriott	San Diego, CA	May 30, 2013	245		8,350
Residence Inn	Coconut Grove, FL	June 12, 2013	140		2,889
Winter Haven	Miami, FL	December 20, 2013	70		203
Blue Moon	Miami, FL	December 20, 2013	75		175
			708	$	22,889

Revenues for all hotels were recorded from the date of acquisition as hotel operating revenues. Further, hotel operating revenues for the year ended December 31, 2013 included revenues for the following hotels that were purchased during the year ended December 31, 2012. Hotels acquired during the year ended December 31, 2012 would have a full year of results included in the year ended December 31, 2013 but not necessarily a full year of results during the same period in 2012. We acquired interests in the following consolidated hotels during the year ended December 31, 2012:

38

Brand	Location	Acquisition Date	Rooms		2013 Hotel Operating Revenues		2012 Hotel Operating Revenues
The Rittenhouse Hotel	Philadelphia, PA	March 1, 2012	111	$	16,969	$	16,809
The Boxer	Boston, MA	May 7, 2012	80		3,799		2,791
Holiday Inn Express	New York, NY	June 18, 2012	228		16,746		10,170
			419	$	37,515	$	29,770

In addition, our same store consolidated portfolio experienced improvements in ADR and occupancy during the year ended December 31, 2013 when compared to the same period in 2012. Occupancy in our same store consolidated hotels increased 190 basis points from 78.6% during the year ended December 31, 2012 to 80.5% for the same period in 2013. ADR improved 1.1%, increasing from $172.67 for the year ended December 31, 2012 to $174.65 during the same period in 2013. These improvements were due to improvements in lodging trends in the markets in which our hotels are located.

We had previously invested in hotel development projects by providing mortgage or mezzanine financing to hotel developers and through the acquisition of land that is then leased to hotel developers. Interest income from development loans receivable was $158 for the year ended December 31, 2013 compared to $1,998 for the same period in 2012.

In April 2013, we acquired the Hyatt Union Square and as part of the consideration we agreed to cancel the $13,303 development loan receivable in its entirety. Furthermore, the only remaining development loan, related to the Hyatt 48Lex, was paid off in full during April 2013. As of December 31, 2013, we had no outstanding development loans receivable.   

Other revenue consists primarily of fees earned for asset management services provided to properties owned by certain of our unconsolidated joint ventures. These fees are earned as a percentage of the revenues of the unconsolidated joint ventures’ hotels. Other revenues were $191 and $212 for the years ended December 31, 2013 and 2012.

Expenses

Total hotel operating expenses increased 16.3% to approximately $188,431 for the year ended December 31, 2013 from $161,982 for the year ended December 31, 2012. Consistent with the increase in hotel operating revenues, hotel operating expenses increased primarily due to the acquisitions consummated since the comparable period in 2012, as mentioned above. The acquisitions also resulted in an increase in depreciation and amortization of 15.6%, or $7,541, to $55,784 for the year ended December 31, 2013 from $48,243 for the year ended December 31, 2012. Real estate and personal property tax and property insurance increased $4,742, or 24.5%, for the year ended December 31, 2013 when compared to the same period in 2012 due to our acquisitions along with a general overall increase in tax assessments and tax rates as the economy improves.

General and administrative expense increased by approximately $570 from $23,455 in 2012 to $24,025 in 2013. Increases in other general and administrative expenses were primarily from increases in employee headcount and resulting base compensation and payroll taxes increases.General and administrative expense includes expense related to non-cash share based payments issued as incentive compensation to the Company’s trustees, executives, and employees. Expense related to share based compensation increased $68 during the year ended December 31, 2013 when compared to the same period of 2012. Please refer to “Note 9 – Share Based Payments” of the notes to the consolidated financial statements for more information about our stock based compensation.

Amounts recorded on our consolidated statement of operations for acquisition and terminated transactions costs will fluctuate from period to period based on our acquisition activities. Acquisition costs typically consist of transfer taxes, legal fees and other costs associated with acquiring a hotel property and transactions that were terminated during the year. Acquisition and terminated transaction costs decreased$205 from $1,179 for the year ended December 31, 2012 to $974 for the year ended December 31, 2013. While we acquired more properties during the year ended December 31, 2013 when compared to the same period in 2012, the manner in which acquisition targets are found can and do dictate the costs necessary to complete the acquisition. The costs incurred in 2013 were related to the following hotels: $500 related to our Hyatt Union Square acquisition; $152 related to our Residence Inn Coconut Grove acquisition; $65 related to our Courtyard San Diego acquisition; and $138 for our Winter Haven and Blue Moon Hotel acquisitions. The costs incurred in 2012 were related to following hotels: $963 related to our acquisition of The Rittenhouse Hotel; $61 related to acquisition of The Boxer; $67 related to our acquisition of Holiday Inn Express Manhattan. The remaining costs were primarily related to transactions that were terminated during the year.

39

Operating Income

Operating income for the year ended December 31, 2013 was $56,630 compared to operating income of $46,180 during the same period in 2012. As noted above, the increase in operating income resulted partially from improved performance of our portfolio and acquisitions that have occurred since the beginning of 2012, but is offset by increases in real estate taxes. In addition, we recognized a net gain of approximately $12,096 on the purchase of the Hyatt Union Square, New York, NY, as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred. Excluding the gain on our purchase of the Hyatt Union Square, operating income would have decreased $1,646.

Interest Expense

Interest expense increased $2,689 from $37,295 for the year ended December 31, 2012 to $39,984 for the year ended December 31, 2013. The increase in interest expense is due primarily to an increase in borrowings drawn on our senior unsecured term loan and our line of credit throughout the year. A portion of these borrowings were used to repay various mortgage loans, which lowered our overall consolidated secured mortgage indebtedness outstanding. Additionally, we used proceeds from the line of credit to fund the purchase of our Residence Inn Coconut Grove and Courtyard San Diego acquisitions.  Finally, we financed a portion of our Hyatt Union Square acquisition with variable rate mortgage debt and borrowed an additional $10,000 to fund construction of the tower at our Courtyard Miami Beach hotel. 

Unconsolidated Joint Venture Investments

The loss from unconsolidated joint ventures consists of our interest in the operating results of the properties we own in joint ventures. The operating results of the unconsolidated joint ventures improved by $210 for the year ended December 31, 2013.

Since the beginning of 2012, we have made efforts to decrease our investment in unconsolidated joint ventures resulting in the sale of 5 of these assets to third parties and the purchase of the remaining 50% interest in our Holiday Inn Express, New York, NY hotelon June 18, 2012. Accordingly, the results of this hotel are now included in our consolidated results and our interest in Metro 29th was remeasured. As a result, during the year ended December 31, 2012, we recorded a loss from the remeasurement of our investments in the unconsolidated joint venture of approximately $224. 

On August 13, 2012, the Company purchased the remaining 50% ownership interest in Inn America Hospitality at Ewing, the lessee of the Courtyard by Marriot, Ewing, NJ. As such, we ceased to account for our investment in Inn America Hospitality at Ewing under the equity method of accounting as of August 10, 2012 because it became a consolidated subsidiary. Our interest in Inn America Hospitality at Ewing, which consisted of our investment in Inn America Hospitality at Ewing and a receivable, was remeasured and as a result based on the appraised value of the hotel, we recorded a loss from the remeasurement of our investments in the unconsolidated joint venture of approximately $1,668 during the twelve months ended December 31, 2012.

We recorded an impairment loss of $1,813 related to the Courtyard, Norwich, CT, one of the properties owned by Mystic Partners, LLC. Mystic Partners, LLC is currently in discussions to transfer title to the property to the lender. As we do not anticipate recovering our investment balance in this asset, we have reduced our investment attributed to this property to $0 as of December 31, 2013.

Income Tax Benefit

During the year ended December 31, 2013, the Company recorded an income tax benefit of $5,600 compared an income tax benefit of $3,355 in 2012. Excluded from the income tax benefit for 2013 is $190 of income tax expense related to discontinued operations. Approximately $2,866 of the income tax benefit relates to deferred tax assets that the Company now believes are realizable and variances between the tax return and year end provision for the year ended December 31, 2012. The remaining income tax benefit is a result of the operations of the Company’s taxable REIT subsidiary, 44 New England.

Discontinued Operations

On September 20, 2013, the Company entered into a purchase and sale agreement to sell a portfolio of 16 non-core hotels for an aggregate purchase price of approximately $217,000. During the third quarter of 2013, the Company had recorded an impairment of $6,591 in connection with the anticipated disposition. As of December 31, 2013, the Company had closed on the sale of 12 of the hotels. Accordingly, a gain of $31,559 was recognized during the fourth quarter of 2013 as the proceeds from the sale exceeded the carrying value. The Company expects to close on the remaining four non-core hotels during the first quarter of 2014.

40

On June 12, 2013, we closed on the sale of our Comfort Inn, Harrisburg, PA. The Company sold the hotel for $3,700 and recorded a gain on sale of $442. Additionally, on September 17, 2013, we closed on the sale of Holiday Inn Express Camp Springs, MD property. The Company sold the hotel for $8,500 and recorded a gain on the sale of $120and an impairment charge of $3,723 during the second quarter of 2013 as the anticipated net proceeds did not exceed the carrying value.

During the year ended December 31, 2012, the Company closed on the sale of 18 non-core hotel properties, transferred the title of the Comfort Inn North Dartmouth, MA to the lender and closed on the sale of the land parcel and improvements located at 585 Eighth Avenue, New York, NY. As a result of these transactions, we recognized a gain of approximately $11,231 for the year ended December 31, 2012.

The operating results for all 37 of the above described hotel properties and one land parcel have been reclassified to discontinued operations in the statement of operations for the years end December 31, 2013 and 2012, respectively.

We recorded income from discontinued operations of approximately $7,388 during the twelve months ended December 31, 2013, compared to income of approximately $3,489 during the twelve months ended December 31, 2012. See “Note 12 – Discontinued Operations” for more information.

Net Income/Loss

Net income applicable to common shareholders for the year ended December 31, 2013 was $32,752 compared to net income applicable to common shareholders of $8,376 for the same period in 2012. As previously discussed, net income applicable to common shareholders for the year ended December 31, 2013 was positively impacted by a net gain of approximately $12,096 on the purchase of the Hyatt Union Square, New York, NY, as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred. Additionally, the $31,559 gain on the sale of 12 of the 16 non-core hotels that closed during the year ended December 31, 2013 positively impacted net income applicable to common shareholders.

Comprehensive Income

Comprehensive income applicable to common shareholders for the year ended December 31, 2013 was $34,162 compared to $7,741 for the same period in 2012. This amount was primarily attributable to net income/loss as more fully described above. Further change in other comprehensive income was primarily the result of the positive shift in the position of the fair value of our derivative instruments. For the year ended December 31, 2013, we recorded other comprehensive income of $1,410 when compared to $635 of other comprehensive loss for the year ended December 31, 2012. The expected rise in the interest rate yield curve in the next few years has favorably shifted many of our interest rate swaps from a liability to an asset position.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2012 TO DECEMBER 31, 2011

(dollars in thousands, except per share data)

Revenue

Our total revenues for the year ended December 31, 2012 consisted of hotel operating revenues, interest income from our development loan program and other revenue. Hotel operating revenues were approximately 99.3% and 98.4% of total revenues for the years ended December 31, 2012 and 2011, respectively. Hotel operating revenues are recorded for wholly owned hotels that are leased to our wholly owned TRS and hotels owned through joint venture interests that were consolidated in our financial statements during the period. Hotel operating revenues increased $69,849, or 30.5%, from $229,156 for the year ended December 31, 2011 to $299,005 for the same period in 2012. This increase in hotel operating revenues was primarily attributable to the acquisitions consummated in 2012 and 2011 as well as increases in hotel operating revenues for our same store consolidated hotels.

41

We acquired interests in the following consolidated hotels that contributed the following operating revenues for the year ended December 31, 2012.

Brand	Location	Acquisition Date	Rooms		2012 Hotel Operating Revenues
Rittenhouse Hotel	Philadelphia, PA	March 1, 2012	116	$	16,809
The Boxer	Boston, MA	May 7, 2012	80		2,791
Holiday Inn Express	New York, NY	June 18, 2012	228		10,170
			424	$	29,770

Revenues for all hotels were recorded from the date of acquisition as hotel operating revenues. Further, hotel operating revenues for the year ended December 31, 2012 included revenues for the following hotels that were purchased during the year ended December 31, 2011. Hotels acquired during the year ended December 31, 2011 would have a full year of results included in the year ended December 31, 2012 but not necessarily a full year of results during the same period in 2011. We acquired interests in the following consolidated hotels during the year ended December 31, 2011:

Brand	Location	Acquisition Date	Rooms		2012 Hotel Operating Revenues		2011 Hotel Operating Revenues
Holiday Inn Express	Water Street, NY	March 25, 2011	112	$	5,847	$	5,580
Capitol Hill Hotel	Washington, DC	April 15, 2011	152		7,570		5,319
Courtyard by Marriott	Westside, Los Angeles, CA	May 19, 2011	260		11,871		6,760
Courtyard by Marriott	Miami, FL	November 16, 2011	263		15,952		1,694
Sheraton	New Castle, DE	December 28, 2010	192		6,844		68
			979	$	48,084	$	19,421

In addition, our same storeconsolidated portfolio experienced improvements in ADR and occupancy during the year ended December 31, 2012 when compared to the same period in 2011. Occupancy in our same store consolidated hotels increased280 basis points from approximately 77.2% during the year ended December 31, 2011 to approximately 80.0% for the same period in 2012. ADR improved 3.6%, increasing from $169.58 for the year ended December 31, 2011 to $175.61 during the same period in 2012. These improvements were due to improvements in lodging trends in the markets in which our hotels are located.

We had previously invested in hotel development projects by providing mortgage or mezzanine financing to hotel developers and through the acquisition of land that is then leased to hotel developers. Interest income from development loans receivable was $1,998 for the year ended December 31, 2012 compared to $3,427 for the same period in 2011. As of December 31, 2012, the only loans that remained outstanding related to the Hyatt Union Square and Hyatt 48Lex development projects.

Other revenue consists primarily of fees earned for asset management services provided to properties owned by certain of our unconsolidated joint ventures. These fees are earned as a percentage of the revenues of the unconsolidated joint ventures’ hotels. Other revenues were $212 and $330 for the years ended December 31, 2012 and 2011.

Expenses

Total hotel operating expenses increased 33.4% to approximately $161,982 for the year ended December 31, 2012 from $121,402 for the year ended December 31, 2011. Consistent with the increase in hotel operating revenues, increases in hotel operating expenses were primarily due to the acquisitions consummated since the comparable period in 2011, as mentioned above. The acquisitions also resulted in an increase in depreciation and amortization of 18.9%, or $7,681, to $48,243 for the year ended December 31, 2012 from $40,562 for the year ended December 31, 2011. Real estate and personal property tax and property insurance increased $3,405, or 21.4%, for the year ended December 31, 2012 when compared to the same period in 2011 due to our acquisitions.

42

General and administrative expense increased by approximately $4,967 from $18,488 in 2011 to $23,455 in 2012. General and administrative expense includes expense related to non-cash share based payments issued as incentive compensation to the Company’s trustees, executives, and employees. Expense related to share based compensation increased $2,088 during the year ended December 31, 2012 when compared to the same period of 2011. This increase in share based compensation expense is due primarily from the vesting of shares and restricted share issuances. The Compensation Committee adopted the 2012 Annual LTIP which included $1,785 of stock based compensation expense for the year ended December 31, 2012. In addition, on April 18, 2012, the Compensation Committee entered into amended and restated employment agreements with the Company’s executive officers, adding $822 of stock based compensation for the year ended December 31, 2012. Please refer to “Note 9 – Share Based Payments” of the notes to the consolidated financial statements for more information about our stock based compensation. Increases in other general and administrative expenses resulted primarily from increases in employee headcount and base or incentive compensation.

Amounts recorded on our consolidated statement of operations for acquisition and terminated costs will fluctuate from period to period based on our acquisition activities. Acquisition costs typically consist of transfer taxes, legal fees and other costs associated with acquiring a hotel property and transactions that were terminated during the year. Acquisition and terminated transaction costs decreased$1,555 from $2,734 for the year ended December 31, 2011 to $1,179 for the year ended December 31, 2012 due to fewer acquisitions consummated during the year ended December 31, 2012. The costs incurred in 2012 were related to the following hotels: $963 related to our acquisition of The Rittenhouse Hotel, Philadelphia, PA; $61 related to acquisition of The Boxer, Boston, MA; $67 related to our acquisition of Holiday Inn Express Manhattan, NY. The costs incurred in 2011 were related to following hotels: Holiday Inn Express, Water Street, NY; Capitol Hill Hotel Washington, DC; Courtyard Westside LA, CA; Courtyard Miami, FL. The remaining costs primarily related to transactions that were terminated during the year.

Operating Income

Operating income for the year ended December 31, 2012 was $46,180 compared to operating income of $32,914 during the same period in 2011. As noted above, the increase in operating income resulted partially from improved performance of our portfolio and acquisitions that have occurred since the beginning of 2011.

Interest Expense

Interest expense increased $3,848 from $33,447 for the year ended December 31, 2011 to $37,295 for the year ended December 31, 2012. The increase in interest expense is due primarily to the new debt and associated interest expense for the acquired properties during 2012 offset partially by lower borrowing costs on our outstanding debt.

Unconsolidated Joint Venture Investments

We incurred a loss from the operations of our unconsolidated joint ventures of $232 for the year ended December 31, 2012 compared to income of $210 for 2011. In addition, during the year ended December 31, 2012, we recorded a loss of $1,668 as a result of the remeasurement of our interest in the Inn America Hospitality at Ewing, LLC joint venture, the owner of the Courtyard by Marriott, in Ewing, NJ, and a loss of $224 recorded as a result of the remeasurement of our interest in the Metro 29th Street Associates, LLC joint venture, the owner of the Holiday Inn Express, in New York, NY.

During the year ended December 31, 2011, as a result of the remeasurement of our interest in the Hiren Boston, LLC joint venture, the owner of the Courtyard by Marriott, in South Boston, MA, we recorded a gainof $2,757.

The Company also entered into two purchase and sale agreements to dispose of 18 non-core hotel properties, four of which were owned in part by the Company through an unconsolidated joint venture. As a result of entering into these purchase and sale agreements, during the year ended December 31, 2011, we recorded an impairment loss of approximately $1,677 for those assets where our investment in the joint venture exceeds the anticipated net proceeds distributable to us based on the purchase price.

Income Tax Benefit

During the year ended December 31, 2012, the Company evaluated the recoverability of its deferred tax assets, and accordingly reversed its valuation allowance against a portion of its deferred tax asset, resulting in an income tax benefit of $3,355. There was no comparable income tax expense or benefit recorded in the prior year as the Company recorded a full valuation allowance against the net operating loss.

43

Discontinued Operations

During the years ended December 31, 2012 and 2011, the Company closed on the sale of a portfolio of 18 hotel properties and the Comfort Inn West Hanover, PA, all of which were deemed to be non-core properties.  In addition, we transferred the title of the Comfort Inn North Dartmouth, MA to the lender and closed on the sale of two land parcels and improvements located at 585 Eighth Avenue, New York, NY and Nevins Street, Brooklyn, NY.  As a result of these transactions, we recognized gains on disposition of approximately $11,231 and $991 for the years ended December 31, 2012 and 2011, respectively.

The Company recorded an impairment loss of approximately $30,248 during the year ended December 31, 2011 for certain of the 18 non-core assets where the anticipated net proceeds would not exceed the carrying values.

The operating results for all 20 of the above described hotel properties and two land parcels have been reclassified to discontinued operations in the statement of operations for the years end December 31, 2012 and 2011, respectively.

We recorded income from discontinued operations of approximately $3,489 during the twelve months ended December 31, 2012, compared to income of approximately $2,189 during the twelve months ended December 31, 2011. See “Note 12 – Discontinued Operations” for more information.

Net Income/Loss

Net income applicable to common shareholders for the year ended December 31, 2012 was $8,376 compared to net loss applicable to common shareholders of $35,733 for the same period in 2011. Net income applicable to common shareholders for the year ended December 31, 2011 was negatively impacted by an impairment charge of approximately $30,248 related to the sale of the 18 non-core hotels discussed above. 

During the year ended December 31, 2011, we issued 4,600,000 preferred shares which increased our preferred dividend $3,501 for the year ended December 31, 2012. See “Note 1 – Organization And Summary Of Significant Accounting Policies” of the notes to the consolidated financial statements for the years ended December 31, 2012 and 2011 for more information.

Comprehensive Income

Comprehensive income applicable to common shareholders for the year ended December 31, 2012 was $7,741 compared to a loss of $36,546 for the same period in 2011. This amount was primarily attributable to net income/loss as more full described above. Further change in other comprehensive income was primarily the result of the positive shift in the position of the fair value of our derivative instruments. For the year ended December 31, 2012, we recorded other comprehensive loss of $635 compared to $813 of other comprehensive loss for the year ended December 31, 2011.

LIQUIDITY, CAPITAL RESOURCES, AND EQUITY OFFERINGS

(dollars in thousands, except per share data)

Potential Sources of Capital

Our organizational documents do not limit the amount of indebtedness that we may incur. Our ability to incur additional debt is dependent upon a number of factors, including the current state of the overall credit markets, our degree of leverage and borrowing restrictions imposed by existing lenders. Our ability to raise funds through the issuance of debt and equity securities is dependent upon, among other things, capital market volatility, risk tolerance of investors, general market conditions for REITs and market perceptions related to the Company’s ability to generate cash flow and positive returns on its investments.

In addition, our mortgage indebtedness contains various financial and non-financial covenants customarily found in secured, nonrecourse financing arrangements. If the specified criteria are not satisfied, the lender may be able to escrow cash flow generated by the property securing the applicable mortgage loan. We have determined that certain debt service coverage ratio covenants contained in the loan agreements securing a number of our hotel properties were not met as of December 31, 2013. Pursuant to the loan agreements, certain lenders have elected to escrow the operating cash flow for these properties. However, these covenants do not constitute an event of default for these loans. Future deterioration in market conditions could cause restrictions in our access to the cash flow of additional properties.

On November 5, 2012, we entered into a new $400,000 senior unsecured credit facility. The $400,000 credit facility provides for a $250,000 senior unsecured revolving line of credit and a $150,000 senior unsecured term loan. Our previous $250,000 secured credit facility was terminated and replaced by the new credit facility, and, as a result, all amounts outstanding

44

under our previous credit facility were repaid with borrowings from our new credit facility. The $400,000 credit facility expires on November 5, 2015, and, provided no event of default has occurred and remains uncured, we may request that the lenders renew the credit facility for two additional one-year periods. The credit facility is also expandable to $550,000 at our request, subject to the satisfaction of certain conditions.

As of December 31, 2013, the outstanding unsecured term loan balance under the $400,000 credit facility was $150,000 and the revolving line of credit was undrawn. As of December 31, 2013, our remaining borrowing capacity under the $400,000 credit facility was $244,175, which is based on certain operating metrics of unencumbered hotel properties designated as borrowing base assets. We intend to repay indebtedness incurred under the $400,000 credit facility from time to time, for acquisitions or otherwise, out of cash flow and from the proceeds of issuances of additional common and preferred shares and potentially other securities.

Subsequent to December 31, 2013, the Company has received a commitment from its existing bank group and is in the process of amending the current $400,000 credit facility which would allow the Company to increase the size of the facility while simultaneously extending the tenor and reducing the pricing. The revised credit facility is expected to close by the end of the first quarter of 2014, subject to lender approval.

We will continue to monitor our debt maturities to manage our liquidity needs. However, no assurances can be given that we will be successful in refinancing all or a portion of our future debt obligations due to factors beyond our control or that, if refinanced, the terms of such debt will not vary from the existing terms. As of December 31, 2013, we have $17,500 indebtedness payable on or before December 31, 2014. During 2012, we used borrowings provided under the unsecured term loan portion of the $400,000 credit facility to repay mortgages on seven hotel properties. We currently expect that cash requirements for all debt that is not refinanced by our existing lenders for which the maturity date is not extended will be met through a combination of cash on hand, refinancing the existing debt with new lenders, draws on the $250,000 revolving line of credit portion of our $400,000 credit facility and the issuance of our securities.

On May 8, 2012, we closed on a public offering in which we issued and sold 24,000,000 common shares through several underwriters for net proceeds to us of approximately $128,558. Immediately upon the closing, we contributed all of the net proceeds of the offering to HHLP in exchange for additional Common Units in HHLP. HHLP used the net proceeds of this offering to reduce some of the indebtedness outstanding under our revolving line of credit facility and for general corporate purposes, including the funding of future acquisitions.

On February 25, 2013, we completed a public offering of 3,000,000 6.875% Series C Cumulative Redeemable Preferred Shares. These shares have a par value of $0.01 per share with a $25.00 liquidation preference per share. Net proceeds of the offering, after deducting underwriting discounts and offering expenses, were approximately $72,370. We utilized the net proceeds of the offering to redeem all outstanding 8.00% Series A Cumulative Redeemable Preferred Shares on March 28, 2013, and for general corporate purposes.

The Series A Preferred shares were redeemed at a per share redemption price of $25.00 together with accrued and unpaid dividends to the redemption date for an aggregate per share redemption price of $25.4056. Dividends ceased accruing on the Series A Preferred Shares on March 28, 2013.

Common Share Repurchase Plan

In December 2012, our Board of Trustees authorized us to repurchase from time to time up to an aggregate of $75,000 of our outstanding common shares through December 31, 2013. We did not repurchase any common shares prior to the expiration of the share repurchase program. In January 2014, our Board of Trustees again authorized us to repurchase from time to time up to an aggregate of $75,000 of our outstanding common shares. The current share repurchase program will expire on December 31, 2014. As of February 26, 2014, we have not repurchased any common shares pursuant to the share repurchase program. We may begin to repurchase common shares in the first quarter of 2014. However, we are under no obligation to do so and we cannot assure you that we will begin repurchasing our common shares at such time or at all.

Development Loans Receivable

During April 2013, we acquired the Hyatt Union Square, and as part of the consideration we agreed to cancel the $13,303 development loan receivable in its entirety. Furthermore, the development loan related to the Hyatt 48Lex was paid in full during the year ended December 31, 2013. As of December 31, 2013, we had no outstanding development loans receivable.

45

Acquisitions

During the year ended December 31, 2013, we acquired the following wholly-owned hotel properties:

Hotel	Acquisition Date		Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Total Purchase Price
Hyatt Union Square, New York, NY*	4/9/2013	$	32,940	$	79,300	$	9,760	$	1,945	$	123,945
Courtyard by Marriott, San Diego, CA	5/30/2013		15,656		51,674		3,671		183		71,184
Residence Inn,    Coconut Grove, FL	6/12/2013		4,146		17,456		218		75		21,895
Blue Moon, Miami Beach, FL	12/20/2013		4,874		20,354		1,125		-		26,353
Winter Haven, Miami Beach, FL	12/20/2013		5,400		18,147		1,050		-		24,597
Total		$	63,016	$	186,931	$	15,824	$	2,203	$	267,974

*We recognized a net gain of approximately $12,096 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

We intend to invest in additional hotels only as suitable opportunities arise and adequate sources of financing are available. We expect that future investments in hotels will depend on and will be financed by, in whole or in part, our existing cash, the proceeds from additional issuances of common or preferred shares, proceeds from the sale of assets, issuances of Common Units, issuances of preferred units or other securities or borrowings.

On October 16, 2013, the Company entered into a purchase and sale agreement to acquire the Hotel Oceana, located in Santa Barbara, CA, from an unaffiliated seller for approximately $42,000, including the assumption of $25,250 in mortgage debt. This transaction is expected to close by the end of the first quarter of 2014.

Operating Liquidity and Capital Expenditures

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under the $250,000 unsecured revolving line of credit portion of our $400,000 credit facility. We believe that the net cash provided by operations in the coming year and borrowings drawn on the $250,000 revolving line of credit portion of our $400,000 credit facility will be adequate to fund the Company’s operating requirements, monthly recurring debt service and the payment of dividends in accordance with REIT requirements of the internal revenue code of 1986, as amended.

To qualify as a REIT, we must distribute annually at least 90% of our taxable income. This distribution requirement limits our ability to retain earnings and requires us to raise additional capital in order to grow our business and acquire additional hotel properties. However, there is no assurance that we will be able to borrow funds or raise additional equity capital on terms acceptable to us, if at all. In addition, we cannot guarantee that we will continue to make distributions to our shareholders at the current rate or at all. Due to the seasonality of our business, cash provided by operating activities fluctuates significantly from quarter to quarter. However, we believe that, based on our current estimates, which include the addition of cash provided by hotels acquired during 2013, our cash provided by operating activities will be sufficient over the next 12 months to fund the payment of our dividend at its current level. However, our Board of Trustees continues to evaluate the dividend policy in the context of our overall liquidity and market conditions and may elect to reduce or suspend these distributions. Cash provided by operating activities for the year ended December 31, 2013 was $90,261 and cash used for the payment of distributions and dividends for the year ended December 31, 2013 was $66,757.

46

Our long-term liquidity requirements consist primarily of the costs of acquiring additional hotel properties, renovation and other non-recurring capital expenditures that need to be made periodically with respect to hotel properties and scheduled debt repayments. We will seek to satisfy these long-term liquidity requirements through various sources of capital, including borrowings under the $250,000 revolving line of credit portion of our $400,000 credit facility and through secured, non-recourse mortgage financings with respect to our unencumbered hotel properties. In addition, we may seek to raise capital through public or private offerings of our securities. Certain factors may have a material adverse effect on our ability to access these capital sources, including our degree of leverage, the value of our unencumbered hotel properties and borrowing restrictions imposed by lenders or franchisors. We will continue to analyze which source of capital is most advantageous to us at any particular point in time, but financing may not be consistently available to us on terms that are attractive, or at all.

Spending on capital improvements during the year ended December 31, 2013 increased when compared to the same period in 2012. During the year ended December 31, 2013 we spent $42,854 on capital expenditures to renovate, improve or replace assets at our hotels. This compares to $28,443 during the same period in 2012. These capital expenditures were undertaken to comply with brand mandated improvements and to initiate projects that we believe will generate a return on investment as we enter a period of recovery in the lodging sector.

In addition to capital reserves required under certain loan agreements and capital expenditures to renovate, improve or replace assets at our hotels, we have two ongoing hotel development projects. We are re-developing a Hampton Inn in lower Manhattan, New York, NY and tentatively project the hotel to open in the second quarter of 2014. In addition, we have entered into a purchase and sale agreement to acquire the Hilton Garden Inn, located on 52nd Street in New York, NY upon completion of construction for an approximate purchase price of $74,000. While this purchase and sale agreement secures the Company’s right to acquire the completed hotel, the Company is not assuming any significant construction risk, including the risk of schedule and cost overruns. These projects will require significant capital which we expect to fund with various sources of capital, including available borrowings under the $250,000 revolving line of credit portion of our credit facility and through secured, non-recourse mortgage financings. In addition, we may seek to raise capital through public or private offerings of our securities to fund these capital improvements. During the year ended December 31, 2013 we spent $20,054 on hotel development projects. This compares to $10,171 during the same period in 2012.

We may spend additional amounts, if necessary, to comply with the reasonable requirements of any franchise license under which any of our hotels operate and otherwise to the extent we deem such expenditures to be in our best interests. We are also obligated to fund the cost of certain capital improvements to our hotels. We expect to use operating cash flow, borrowings under the $250,000 revolving line of credit portion of our $400,000 credit facility, and proceeds from issuances of our securities to pay for the cost of capital improvements and any furniture, fixture and equipment requirements in excess of the reserves referenced above.

CASH FLOW ANALYSIS

(dollars in thousands, except per share data)

Comparison of the Years Ended December 31, 2013 and December 31, 2012

Net cash provided by operating activities increased$18,505, from $71,756 for the year ended December 31, 2012 to $90,261 for 2013. Net income, adjusted for non-cash items such as gain on acquisition of hotel assets, gain on disposition of hotel properties, impairment of assets, benefit for income taxes, depreciation and amortization, non-cash debt extinguishment, development loan interest income added to principal, interest in income/loss from and distributions from unconsolidated joint ventures, loss recognized on change in fair value of derivative instruments and stock based compensation increased $4,720 for the year ended December 31, 2013 when compared to 2012. This is primarily due to cash provided by properties acquired over the past twelve months and improving operating results within our existing portfolio. In addition to these increases in cash provided by these operating activities was an increase in net cash used in funding working capital assets, such as payments into escrows, and repaying working capital liabilities, such as accounts payable and accrued expenses.

Net cash used in investing activities increased $69,657, from $55,817 for year ended December 31, 2012 to $125,474 for 2013. Spending on the purchase of hotel properties, deposits on hotel acquisitions and development projects was $142,474 higher during 2013 compared to 2012. Offsetting this increase in spending on the purchase of new hotels was in increase in proceeds from the disposition of hotel properties, which during the year ended December 31, 2013 was $72,293 higher than during the year ended December 31, 2012.

47

Net cash provided by financing activities for year ended December 31, 2013 was $2,367 compared to $28,552 during the same period in 2012. During the year ended December 31, 2013, we received proceeds of $72,370 from the issuance of our series C preferred shares and used $60,000 of these proceeds to redeem our series A preferred shares, resulting in net proceeds of $12,370.  During the same period in 2012 we received net proceeds of $128,558 from the issuance of common shares. Dividends and distributions payable increased $6,630 during the year ended December 31, 2013, compared to 2012, due to an increase in the number of outstanding common shares as a result of a common stock offering completed in May 2012, and the additional preferred share dividends we paid due to the timing of the preferred stock offering and subsequent redemption which occurred in March 2013.  For the year ended December 31, 2013, borrowings under our unsecured term loan and mortgages and notes payable, net of repayments provided cash of $60,602, compared to net repayments of $39,783 for the same period in 2012.

Comparison of the Years Ended December 31, 2012 and December 31, 2011

Net cash provided by operating activities increased $13,088, from $58,668 for the year ended December 31, 2011 to $71,756 for 2012. Net income, adjusted for non-cash items such as gain on disposition of hotel properties, impairment of assets, benefit for income taxes, depreciation and amortization, non-cash debt extinguishment, development loan interest income added to principal, interest in income/loss from and distributions from unconsolidated joint ventures, loss recognized on change in fair value of derivative instruments and stock based compensation increased$16,556 for the year ended December 31, 2012 when compared to 2011. This is primarily due to cash provided by properties acquired over the past eighteen months and improving operating results within our existing portfolio. Offsetting the increases in cash provided by these operating activities was an increase in net cash used in funding working capital assets, such as accounts payable and accrued expenses.

Net cash used in investing activities decreased$174,941, from $230,758 for year ended December 31, 2011 compared to $55,817 for the same period during 2012. During the year ended December 31, 2011, purchases of hotel property assets was $98,762 higher than during the same period in 2012. Additionally, proceeds from the disposition of hotel properties during the year ended December 31, 2012 increased $61,361 when compared to the same period in 2011 as a result of our sale of non-core assets during 2012.

Net cash provided by financing activities for year ended December 31, 2012 was $28,552 compared to $131,062 during the same period in 2011.  The decrease in cash provided by financing activities during the year ended December 31, 2012 was primarily the result of an increase in the repayment of mortgages and notes payable. Repayments, funded in part by borrowings under the $100,000 unsecured term loan portion of our $400,000 credit facility, were $179,285 higher during the year ended December 31, 2012 compared to the same period in 2011. Net repayments on our revolving credit facility were $56,000 higher during the year ended December 31, 2012 than in the same period during 2011. Offsetting this increase in cash used to repay the line of credit and mortgagees and notes payable were proceeds from our common stock offering. During the second quarter of 2012, we completed an offering of common shares with net proceeds of $128,558. During the second quarter of 2011, we completed an offering of Series B preferred shares with net proceeds of $110,977. These offerings have increased our preferred dividend obligations and common dividend payments resulting in a net increase in total dividends and distributions paid of $12,995 when comparing the years ended December 31, 2012 and 2011.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

FUNDS FROM OPERATIONS

(in thousands, except share data)

The National Association of Real Estate Investment Trusts (“NAREIT”) developed Funds from Operations (“FFO”) as a non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. We calculate FFO applicable to common shares and Common Units in accordance with the April 2002 National Policy Bulletin of NAREIT, which we refer to as the White Paper. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP) excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated assets, gains on hotel acquisitions, plus certain non-cash items, such as loss from impairment of assets and depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our interpretation of the NAREIT definition is that noncontrolling interest in net income (loss) should be added back to (deducted from) net income (loss) as part of reconciling net income (loss) to FFO. Our FFO computation may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do.

48

The GAAP measure that we believe to be most directly comparable to FFO, net income (loss) applicable to common shareholders, includes loss from the impairment of certain depreciable assets, our investment in unconsolidated joint ventures and land, depreciation and amortization expenses, gains or losses on property sales, gains on hotel acquisitions, noncontrolling interest and preferred dividends. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from our property operations. We determined that the loss from the impairment of certain depreciable assets including investments in unconsolidated joint ventures and land, was driven by a measurable decrease in the fair value of certain hotel properties and other assets as determined by our analysis of those assets in accordance with applicable GAAP. As such, these impairments have been eliminated from net loss to determine FFO.

FFO does not represent cash flows from operating activities in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company’s performance or to cash flow as a measure of liquidity or ability to make distributions. We consider FFO to be a meaningful, additional measure of operating performance because it excludes the effects of the assumption that the value of real estate assets diminishes predictably over time, and because it is widely used by industry analysts as a performance measure. We show both FFO from consolidated hotel operations and FFO from unconsolidated joint ventures because we believe it is meaningful for the investor to understand the relative contributions from our consolidated and unconsolidated hotels. The display of both FFO from consolidated hotels and FFO from unconsolidated joint ventures allows for a detailed analysis of the operating performance of our hotel portfolio by management and investors. We present FFO applicable to common shares and Common Units because our Common Units are redeemable for common shares. We believe it is meaningful for the investor to understand FFO applicable to all common shares and Common Units.

The following table reconciles FFO for the periods presented to the most directly comparable GAAP measure, net income, for the same periods (dollars in thousands):

		Year Ended
		December 31, 2013		December 31, 2012		December 31, 2011
Net income (loss) applicable to common shareholders	$	32,752	$	8,376	$	(35,733)
Income allocated to noncontrolling interests		335		(158)		(1,734)
Income (loss) from unconsolidated joint ventures		1,835		2,124		(1,290)
Gain on hotel acquisition		(12,096)		-		-
Gain on disposition of hotel properties		(32,121)		(11,231)		(991)
Loss from impairment of depreciable assets		10,314		-		30,248
Depreciation and amortization		55,784		48,243		40,562
Depreciation and amortization from discontinued operations		7,050		9,148		15,142
FFO allocated to noncontrolling interests in consolidated joint ventures (1)		-		-		147
Funds from consolidated hotel operations applicable to common shareholders and Partnership units		63,853		56,502		46,351
(Loss) income from Unconsolidated Joint Ventures		(1,835)		(2,124)		1,290
Loss (gain) from remeasurement of investment in unconsolidated joint ventures		-		1,892		(2,757)
Impairment of investment in unconsolidated joint ventures		1,813		-		1,677
Depreciation and amortization of purchase price   in excess of historical cost (2)		596		902		1,965
Interest in depreciation and amortization   of unconsolidated joint ventures (3)		6,068		5,441		5,906
Funds from unconsolidated joint ventures operations applicable to common shareholders and Partnership units		6,642		6,111		8,081
Funds from Operations applicable to common shareholders and Partnership units	$	70,495	$	62,613	$	54,432
Weighted Average Common Shares and Units Outstanding
Basic		198,390,450		187,415,270		168,753,382
Diluted		208,886,212		198,110,615		181,090,322

(1)Adjustment made to deduct FFO related to the noncontrolling interest in our consolidated joint ventures. Represents the portion of net income and depreciation allocated to our joint venture partners.

(2)Adjustment made to add depreciation of purchase price in excess of historical cost of the assets in the unconsolidated joint venture at the time of our investment.

(3)Adjustment made to add our interest in real estate related depreciation and amortization of our unconsolidated joint ventures. Allocation of depreciation and amortization is consistent with allocation of income and loss.

49

Certain amounts related to depreciation and amortization and depreciation and amortization from discontinued operations in the prior year FFO reconciliation have been recast to conform to the current year presentation. In addition, based on guidance provided by NAREIT, we have eliminated loss from the impairment of certain depreciable assets, including investments in unconsolidated joint ventures and land, from net income (loss) to arrive at FFO in each year presented.

INFLATION

Operators of hotel properties, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. However, competitive pressures may limit the ability of our management companies to raise room rates.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, estimates are evaluated by us, including those related to carrying value of investments in hotel properties. Our estimates are based upon historical experience and on various other assumptions we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue Recognition

Approximately 95% of our revenues are derived from hotel room revenues and revenue from other hotel operating departments. We directly recognize revenue and expense for all consolidated hotels as hotel operating revenue and hotel operating expense when earned and incurred. These revenues are recorded net of any sales or occupancy taxes collected from our guests. All revenues are recorded on an accrual basis, as earned. We participate in frequent guest programs sponsored by the brand owners of our hotels and we expense the charges associated with those programs, as incurred.

Revenue for interest on development loan financing is recorded in the period earned based on the interest rate of the loan and outstanding balance during the period. Development loans receivable and accrued interest on the development loans receivable are evaluated to determine if outstanding balances are collectible. Interest is recorded only if it is determined the outstanding loan balance and accrued interest balance are collectible.

Other revenues consist primarily of fees earned for asset management services provided to hotels we own through unconsolidated joint ventures. Fees are earned as a percentage of hotel revenue and are recorded in the period earned.

Investment in Hotel Properties

Investments in hotel properties are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life of up to 40 years for buildings and improvements, two to seven years for furniture, fixtures and equipment. We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in hotel properties. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in hotel properties we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Most identifiable assets, liabilities, noncontrolling interests, and goodwill related to hotel properties acquired in a business combination are recorded at full fair value. Estimating techniques and assumptions used in determining fair values involve significant estimates and judgments. These estimates and judgments have a direct impact on the carrying value of our assets and liabilities which can directly impact the amount of depreciation expense recorded on an annual basis and could have an impact on our assessment of potential impairment of our investment in hotel properties.

50

The operations related to properties that have been sold or properties that are intended to be sold are presented as discontinued operations in the statement of operations for all periods presented, and properties intended to be sold are designated as “held for sale” on the balance sheet.

Based on the occurrence of certain events or changes in circumstances, we review the recoverability of the property’s carrying value. Such events or changes in circumstances include the following:

a significant decrease in the market price of a long-lived asset;

a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;

a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator;

an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;

a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and

a current expectation that, it is more likely than not that, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

We review our portfolio on an on-going basis to evaluate the existence of any of the aforementioned events or changes in circumstances that would require us to test for recoverability. In general, our review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value expected, as well as the effects of hotel demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in hotel properties.

As of December 31, 2013, based on our analysis, we have determined that the future cash flow of each of the properties in our portfolio is sufficient to recover its carrying value.

Investment in Joint Ventures

Properties owned in joint ventures are consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (VIE) or we maintain control of the asset through our voting interest or other rights in the operation of the entity. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. This evaluation requires significant judgment.

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a VIE or our voting interest in a voting interest entity, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliates as they occur rather than as dividends or other distributions are received, limited to the extent of our investment in, advances to and commitments for the investee. Pursuant to our joint venture agreements, allocations of profits and losses of some of our investments in unconsolidated joint ventures may be allocated disproportionately as compared to nominal ownership percentages due to specified preferred return rate thresholds.

The Company periodically reviews the carrying value of its investment in unconsolidated joint ventures to determine if circumstances exist indicating impairment to the carrying value of the investment that is other than temporary. When an impairment indicator is present, we will estimate the fair value of the investment. Our estimate of fair value takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. This determination requires significant estimates by management, including the expected cash flows to be generated by the assets owned and operated by the joint venture. Subsequent changes in estimates could impact the determination of whether impairment exists. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount over the fair value of our investment in the unconsolidated joint venture.

51

Development Loans Receivable

The Company accounts for the credit risk associated with its development loans receivable by monitoring the portfolio for indications of impairment. Our methodology consists of the following:



Identifying loans for individual review. In general, these consist of development loans that are not performing in accordance with the contractual terms of the loan.

Assessing whether the loans identified for review are impaired. That is, whether it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. We determine the amount of impairment by calculating the estimated fair value, discounted cash flows or the value of the underlying collateral.

Any charge to earnings necessary based on our review is recorded on our income statement as an impairment of a development loan receivable. Our assessment of impairment is based on information known at the time of the review. Changes in factors underlying the assessment could have a material impact on the amount of impairment to be charged against earnings. Such changes could impact future results.

Based on our reviews, we determined that it is probable that all amounts will be collected according to the contractual terms of each of our development loan agreements.

Accounting for Derivative Financial Investments and Hedging Activities

We use derivatives to hedge, fix and cap interest rate risk and we account for our derivative and hedging activities by recording all derivative instruments at fair value on the balance sheet. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. Cash flow hedges that are considered highly effective are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in other comprehensive income within shareholders’ equity. Amounts are reclassified from other comprehensive income to the income statements in the period or periods the hedged forecasted transaction affects earnings.

Under cash flow hedges, derivative gains and losses not considered highly effective in hedging the change in expected cash flows of the hedged item are recognized immediately in the income statement. For hedge transactions that do not qualify for the short-cut method, at the hedge’s inception and on a regular basis thereafter, a formal assessment is performed to determine whether changes in the cash flows of the derivative instruments have been highly effective in offsetting changes in cash flows of the hedged items and whether they are expected to be highly effective in the future.

RELATED PARTY TRANSACTIONS

We have entered into a number of transactions and arrangements that involve related parties. For a description of the transactions and arrangements, please see Note 7, “Commitments and Contingencies and Related Party Transactions,” to the consolidated financial statements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following table summarizes our contractual obligations and commitments to make future payments under contracts, such as debt and lease agreements, as of December 31, 2013.

Contractual Obligations	2014		2015		2016		2017		2018		Thereafter
Long Term Debt	$	17,500	$	100,188	$	302,648	$	181,184	$	13,802	$	51,548
Interest Expense on Long Term Debt		35,229		30,161		21,417		3,984		1,717		30,067
Unsecured Term Loan		-		150,000		-		-		-		-
Unsecured Line of Credit		-		-		-		-		-		-
Interest Expense on Unsecured Term Loan		4,815		4,414		-		-		-		-
Hotel Ground Rent		735		735		735		735		735		60,930
Total	$	58,279	$	285,498	$	324,800	$	185,903	$	16,254	$	142,545

52

Item 7A.Quantitative and Qualitative Disclosures About Market Risk (in thousands, except per share data)

Our primary market risk exposure is to changes in interest rates on our variable rate debt which has not been effectively hedged with interest swaps or interest rate caps. As of December 31, 2013, we are exposed to interest rate risk with respect to variable rate borrowings under our $400,000 credit facility and certain variable rate mortgages and notes payable. As of December 31, 2013, we had total variable rate debt outstanding of $125,025 with a weighted average interest rate of 3.82%. The effect of a 100 basis point increase or decrease in the interest rate on our variable rate debt outstanding as of December 31, 2013 would be an increase or decrease in our interest expense for the twelve months ended December 31, 2013 of $1,627.

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates for a portion of our borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements. We have also entered into derivative financial instruments such as interest rate swaps or caps, and in the future may enter into treasury options or locks, to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable rate debt. As of December 31, 2013, we have an interest rate cap related to debt on the Hotel 373, New York, NY, Hyatt Union Square, New York, NY and our two subordinated notes payable, and we have four interest rate swaps related to debt on the Courtyard by Marriott, Westside, Los Angeles, CA, Capitol Hill Hotel, Washington DC, Courtyard by Marriott, Miami Beach, FL, and our corporate credit facility. We do not intend to enter into derivative or interest rate transactions for speculative purposes.

As of December 31, 2013 all of our outstanding consolidated long-term indebtedness (excluding $45,835 in outstanding mortgage indebtedness related to assets held for sale) is subject to fixed rates or effectively capped, including borrowings under our $400,000 revolving credit facility.

Changes in market interest rates on our fixed-rate debt impact the fair value of the debt, but such changes have no impact on interest expense incurred. If interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our debt to decrease. The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2013 levels, with all other variables held constant. A 100 basis point increase in market interest rates would cause the fair value of our fixed-rate debt outstanding at December 31, 2013 to be approximately $811,850 and a 100 basis point decrease in market interest rates would cause the fair value of our fixed-rate debt outstanding at December 31, 2013 to be approximately $846,579.

		2014			2015			2016			2017			2018			Thereafter		Total
Fixed Rate Debt	$	16,298		$	248,910		$	217,597		$	149,403		$	13,802		$	-	$	646,010
Weighted Average Interest Rate		5.10%			5.65%			5.52%			7.15%			7.15%			0.00%		6.11%
Floating Rate Debt	$	372		$	396		$	55,420		$	17,289		$	-		$	51,548	$	125,025
Weighted Average Interest Rate		3.81%			3.81%			3.37%			3.16%			3.16%			3.16%		3.41%
Discontinued Operations	$	830		$	882		$	29,631		$	14,492		$	-		$	-	$	45,835
Weighted Average Interest Rate		5.92%			5.92%			5.59%			5.59%			-			-		5.75%
	$	17,500	-	$	250,188	-	$	302,648	-	$	181,184	-	$	13,802	-	$	51,548	$	816,870

The table incorporates only those exposures that existed as of December 31, 2013, and does not consider exposure or positions that could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the future period, prevailing interest rates, and our hedging strategies at that time.

53

The following table illustrates expected principal repayments and certain adjustments to reflect:

●the Company’s exercise of each of the extension options within its discretion or upon lender approval, and

●the lender’s extension of the maturity of the revolving line of credit extension option.

		2014		2015		2016		2017		2018		Thereafter		Total
Principal repayments due as of December 31, 2013, as noted above	$	17,500	$	250,188	$	302,648	$	181,184	$	13,802	$	51,548	$	816,870
Less: Discontinued Operations (1)		($830)		($882)		($29,631)		($14,492)		-		-		($45,835)
Adjustments: Extension Options (2)
Courtyard - Miami Beach Oceanfront (3)		-		-		(60,000)		60,000		-		-		-
Courtyard - Los Angeles, CA  (4)		-		-		-		(24,000)		24,000		-		-
Capitol Hill Hotel - Washington DC (5)		-		(23,635)		1,467		22,168		-		-		-
Hyatt Union Square - New York, NY (6)		-		-		(55,000)		55,000		-		-		-
Unsecured Term Loan (7)		-		(150,000)		-		150,000		-		-		-
As Adjusted Principal Repayments	$	16,670	$	75,671	$	159,484	$	429,860	$	37,802	$	51,548	$	771,035
(1) Represents the remaining 4 properties with mortgage debt under definitive agreement to be sold to Blackstone.
(2) Adjustments include amortization of principal scheduled to occur subsequent to December 31, 2013 through maturity date and extended maturity date if options are exercised.
(3) Represents mortgage debt on the Courtyard Miami Beach Oceanfront. The loan is schedule to mature in July 2016 and maintains a one year extension option.
(4) Represents the mortgage debt on the Courtyard, Los Angeles, CA, which contains a one-year extension option, which is  subject to the lender's approval in its discretion, effectively extending the maturity from September 2017 to September 2018.
(5) Represents mortgage debt on the Capitol Hill Hotel, Washington DC, which contains a two-year extension option, which is subject to the lender's approval in its discretion, effectively extending the maturity from February 2015 to February 2017.
(6) Represents the mortgage debt on the Hyatt Union Square New York, which contains a one-year extension option, subject to the lender's approval at its discretion, effectively extending the maturity from April of 2016 to April 2017.
(7) Represents the Unsecured Term loan, which contains two one-year extension options, which are subject to the lenders' approval in its discretion, effectively extending the maturity from November 2015 to November 2017.

54

Item 8. Financial Statements and Supplementary Data

Hersha Hospitality Trust

	Page
Report of Independent Registered Public Accounting Firm	20
Consolidated Balance Sheets as of December 31, 2013 and 2012	20
Consolidated Statement of Operations for the years ended December 31, 2013, 2012, and 2011	20
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012, and 2011	20
Consolidated Statements of Equity for the years ended December 31, 2013, 2012 and 2011	20
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	20
Notes to Consolidated Financial Statements	20
Schedule III - Real Estate and Accumulated Depreciation for the year ended December 31, 2013	20

55

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of

Hersha Hospitality Trust:

We have audited the accompanying consolidated balance sheets of Hersha Hospitality Trust and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the years in the three-year period ended December 31, 2013. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule as listed in the accompanying index.  These consolidated financial statements and financial statement schedule are the responsibility of Hersha Hospitality Trust’s management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hersha Hospitality Trust and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hersha Hospitality Trust and subsidiaries’ internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2014, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Philadelphia, Pennsylvania

February 26, 2014

56

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013 AND 2012

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

	December 31, 2013		December 31, 2012
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets of $85,759 and $86,657	$	1,535,835	$	1,466,713
Investment in Unconsolidated Joint Ventures		12,044		16,007
Development Loans Receivable		-		28,425
Cash and Cash Equivalents		36,213		69,059
Escrow Deposits		25,938		26,792
Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of $43 and $365		9,141		11,538
Deferred Financing Costs, Net of Accumulated Amortization of $7,070 and $4,841		7,570		8,695
Due from Related Parties		11,124		8,488
Intangible Assets, Net of Accumulated Amortization of $3,227 and $2,413		7,603		8,698
Deposits on Hotel Acquisitions		18,586		37,750
Other Assets		27,460		25,514
Hotel Assets Held for Sale		56,583		-
Total Assets	$	1,748,097	$	1,707,679
Liabilities and Equity:
Line of Credit	$	-	$	-
Unsecured Term Loan		150,000		100,000
Unsecured Notes Payable		51,548		51,548
Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt of $55,714 and $57,256		571,953		641,160
Accounts Payable, Accrued Expenses and Other Liabilities		40,852		33,838
Dividends and Distributions Payable		15,955		15,621
Due to Related Parties		4,815		4,403
Liabilities Related to Hotel Assets Held for Sale		45,835		-
Total Liabilities		880,958		846,570
Redeemable Noncontrolling Interests - Common Units (Note 1)	$	-	$	15,321
Equity:
Shareholders' Equity:
Preferred Shares:  $.01 Par Value, 29,000,000 shares Authorized, 7,600,000 Series B and C Shares Issued and Outstanding at December 31, 2013 and 7,000,000 Series A and B Preferred Shares Issued and Outstanding at December 31, 2012, with Liquidation Preferences of $25 Per Share (Note 1)		76		70
Common Shares:  Class A, $.01 Par Value, 300,000,000 Shares Authorized at December 31, 2013 and December 31, 2012, 202,759,419 and 198,672,356 Shares Issued and Outstanding at December 31, 2013 and December 31, 2012, respectively		2,028		1,986
Common Shares:  Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding		-		-
Accumulated Other Comprehensive Loss		(376)		(1,786)
Additional Paid-in Capital		1,200,798		1,178,292
Distributions in Excess of Net Income		(364,568)		(348,734)
Total Shareholders' Equity		837,958		829,828
Noncontrolling Interests (Note 1):
Noncontrolling Interests - Common Units		29,523		15,484
Noncontrolling Interests - Consolidated Variable Interest Entity		(342)		476
Total Noncontrolling Interests		29,181		15,960
Total Equity		867,139		845,788
Total Liabilities and Equity	$	1,748,097	$	1,707,679

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

57

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

	Year Ended December 31,
	2013		2012			2011
Revenue:
Hotel Operating Revenues	$	338,064	$	299,005	$	229,156
Interest Income from Development Loans		158		1,998		3,427
Other Revenues		191		212		330
Total Revenues		338,413		301,215		232,913
Operating Expenses:
Hotel Operating Expenses		188,431		161,982		121,402
Gain on Insurance Settlements		(403)		-		-
Hotel Ground Rent		985		835		877
Real Estate and Personal Property Taxes and Property Insurance		24,083		19,341		15,936
General and Administrative (including Share Based Payments of $9,746, $9,678 and $7,590 for the years ended December 31, 2013, 2012, and 2011, respectively)		24,025		23,455		18,488
Acquisition and Terminated Transaction Costs		974		1,179		2,734
Depreciation and Amortization		55,784		48,243		40,562
Gain on Hotel Acquisitions, Net		(12,096)		-		-
Total Operating Expenses		281,783		255,035		199,999
Operating Income		56,630		46,180		32,914
Interest Income		1,784		1,311		456
Interest Expense		39,984		37,295		33,447
Other Expense		897		740		1,011
Loss on Debt Extinguishment		545		3,189		102
Income (Loss) Before (Loss) Income from Unconsolidated Joint Venture Investments, Income Taxes and Discontinued Operations		16,988		6,267		(1,190)
(Loss) Income from Unconsolidated Joint Ventures		(22)		(232)		210
Impairment of Investment in Unconsolidated Joint Venture		(1,813)		-		(1,677)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Venture		-		(1,892)		2,757
(Loss) Income from Unconsolidated Joint Venture Investments		(1,835)		(2,124)		1,290
Income Before Income Taxes		15,153		4,143		100
Income Tax Benefit		5,600		3,355		-
Income from Continuing Operations		20,753		7,498		100
Discontinued Operations  (Note 12):
Gain on Disposition of Hotel Properties		32,121		11,231		991
Impairment of Discontinued Assets		(10,314)		-		(30,248)
Income from Discontinued Operations, Net of Income Taxes		7,388		3,489		2,189
Income (Loss) from Discontinued Operations		29,195		14,720		(27,068)
Net Income (Loss)		49,948		22,218		(26,968)
(Income) Loss Allocated to Noncontrolling Interests		(335)		158		1,734
Preferred Distributions		(14,611)		(14,000)		(10,499)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares		(2,250)		-		-
Net Income (Loss) Applicable to Common Shareholders	$	32,752	$	8,376	$	(35,733)

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

58

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

	Year Ended December 31,
	2013			2012				2011
Earnings Per Share:
BASIC
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$	0.02		$	(0.03)		$	(0.06)
(Loss) Income from Discontinued Operations Applicable to Common Shareholders		0.14			0.08			(0.15)
Net (Loss) Income Applicable to Common Shareholders	$	0.16		$	0.04		$	(0.21)
DILUTED
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$	0.02		$	(0.03)		$	(0.06)
(Loss) Income from Discontinued Operations Applicable to Common Shareholders		0.14			0.08			(0.15)
Net (Loss) Income Applicable to Common Shareholders	$	0.16		$	0.04		$	(0.21)
Weighted Average Common Shares Outstanding:
Basic		198,390,450			187,415,270			168,753,382
Diluted		201,918,177	*		187,415,270	*		168,753,382	*

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and common units of limited partnership interest (“Common Units”) in the Operating Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these shares and units in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:

	Year Ended December 31,
	2013	2012	2011
Common Units of Limited Partnership Interest	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding	-	433,097	584,216
Contingently Issuable Share Awards	-	2,778,545	2,097,456
Options to Acquire Common Shares Outstanding	-	275,580	2,360,156
Total Potentially Dilutive Securities Excluded from the Denominator	6,968,035	10,695,345	12,336,940

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

59

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS]

		2013		2012		2011
Net Income (Loss)	$	49,948	$	22,218	$	(26,968)
Other Comprehensive Income (Loss)
Change in Fair Value of Derivative Instruments		2,694		1,073		(367)
Less: Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income		(1,284)		(1,708)		(446)
Comprehensive Income (Loss)		51,358		21,583		(27,781)
Less:  Comprehensive (Income) Loss Attributable to Noncontrolling Interests		(335)		158		1,734
Less:  Preferred Distributions		(14,611)		(14,000)		(10,499)
Less:  Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares		(2,250)		-		-
Comprehensive Income (Loss) Attributable to Common Shareholders	$	34,162	$	7,741	$	(36,546)

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

60

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

[IN THOUSANDS]

		Shareholders' Equity								Noncontrolling Interests					Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Earnings ($)	Total Shareholders' Equity ($)	Shares	Common Units ($)	Consolidated Variable Interest Entity ($)	Total Noncontrolling Interests ($)	Total Equity ($)	Shares	Common Units ($)
Balance at December 31, 2012	198,672,356	1,986	-	7,000,000	70	1,178,292	(1,786)	(348,734)	829,828	4,048,254	15,484	476	15,960	845,788	3,064,252	15,321
Unit Conversion/Redemption	27,790	1	-	-	-	(234)	-	-	(233)	(197,790)	(766)	-	(766)	(999)	-	-
Reclassification of Noncontrolling Interest	-	-	-	-	-	-	-	-	-	3,064,252	15,365	-	15,365	15,365	(3,064,252)	(15,365)
Preferred Stock
Preferred Stock Offering, Net of Costs	-	-	-	3,000,000	30	72,340	-	-	72,370	-	-	-	-	72,370	-	-
Preferred Stock Redemption	-	-	-	(2,400,000)	(24)	(59,976)	-	-	(60,000)	-	-	-	-	(60,000)	-	-
Dividends and Distributions declared:
Common Stock ($0.24 per share)	-	-	-	-	-	-	-	(50,836)	(50,836)	-	-	-	-	(50,836)	-	-
Preferred Stock	-	-	-	-	-	-	-	(14,611)	(14,611)	-	-	-	-	(14,611)	-	-
Common Units ($0.24 per share)	-	-	-	-	-	-	-	-	-	-	(1,669)	-	(1,669)	(1,669)	-	-
Dividend Reinvestment Plan	7,206	-	-	-	-	38	-	-	38	-	-	-	-	38	-	-
Stock Based Compensation				-						-			-		-
Grants	4,052,067	41	-	-	-	467	-	-	508	-	-	-	-	508	-	-
Amortization	-	-	-	-	-	9,871	-	-	9,871	-	-	-	-	9,871	-	-
Change in Fair Value of Derivative Instruments	-	-	-	-	-	-	1,410	-	1,410	-	-	-	-	1,410	-	-
Net Income (Loss)	-	-	-	-	-	-	-	49,613	49,613	-	1,109	(818)	291	49,904	-	44
Balance at December 31, 2013	202,759,419	2,028	-	7,600,000	76	1,200,798	(376)	(364,568)	837,958	6,914,716	29,523	(342)	29,181	867,139	-	-

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

61

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

[IN THOUSANDS]

	Shareholders' Equity									Noncontrolling Interests						Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Earnings ($)	Total Shareholders' Equity ($)	Shares	Common Units ($)	Consolidated Joint Ventures ($)	Consolidated Variable Interest Entity ($)	Total Noncontrolling Interests ($)	Total Equity ($)	Shares	Common Units ($)
Balance at December 31, 2011	169,969,973	1,699	-	7,000,000	70	1,041,027	(1,151)	(310,972)	730,673	4,206,064	16,862	307	-	17,169	747,842	3,064,252	14,955
Unit Conversion	157,810	1	-	-	-	571	-	-	572	(157,810)	(572)	-	-	(572)	-	-	-
Reallocation of Noncontrolling Interest	-	-	-	-	-	(966)	-	-	(966)	-	-	-	-	-	(966)	-	966
Common Stock Issuance	-			-						-						-
Common Stock Offering, Net of Costs	24,000,000	240	-	-	-	128,318	-	-	128,558	-	-	-	-	-	128,558	-	-
Common Stock Option Cancellation	2,521,561	25	-	-	-	(25)	-		-	-	-	-	-	-	-	-	-
Dividends and Distributions declared:
Common Stock ($0.24 per share)	-	-	-	-	-	-	-	(46,138)	(46,138)	-	-	-	-	-	(46,138)	-	-
Preferred Stock	-	-	-	-	-	-	-	(14,000)	(14,000)	-	-	-	-	-	(14,000)	-	-
Common Units ($0.24 per share)	-	-		-		-	-	-	-	-	(991)	-	-	(991)	(991)	-	(736)
Dividend Reinvestment Plan	5,117	-	-	-	-	24	-	-	24	-	-	-	-	-	24	-	-
Stock Based Compensation
Grants	2,017,895	21	-	-	-	2,616	-	-	2,637	-	-	-	-	-	2,637	-	-
Amortization	-	-	-	-	-	6,727	-	-	6,727	-	-	-	-	-	6,727	-	-
Consolidation of Variable Interest Entity	-	-	-	-	-	-	-	-	-	-	-		956	956	956	-	-
Deconsolidation of Consolidated Joint Ventures	-	-	-	-	-	-	-	-	-	-	-	(307)	-	(307)	(307)	-	-
Change in Fair Value of Derivative Instruments	-	-	-	-	-	-	(635)	-	(635)	-	-	-	-	-	(635)	-	-
Net Income (Loss)	-	-	-	-	-	-	-	22,376	22,376	-	185	-	(480)	(295)	22,081	-	136
Balance at December 31, 2012	198,672,356	1,986	-	7,000,000	70	1,178,292	(1,786)	(348,734)	829,828	4,048,254	15,484	-	476	15,960	845,788	3,064,252	15,321

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

62

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

[IN THOUSANDS]

	Shareholders' Equity									Noncontrolling Interests					Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Earnings ($)	Total Shareholders' Equity ($)	Shares	Common Units ($)	Consolidated Joint Ventures ($)	Total Noncontrolling Interests ($)	Total Equity ($)	Shares	Common Units ($)
Balance at December 31, 2010	169,205,638	1,692	-	2,400,000	24	918,215.00	(338)	(236,159)	683,434	4,404,660	19,410	474	19,884	703,318	3,014,252	19,894
Unit Conversion	195,000	2	-	-	-	637	-	-	639	(245,000)	(868)	-	(868)	(229)	50,000	230
Reallocation of Noncontrolling Interest	-	-	-	-	-	3,835	-	-	3,835	-	(13)	-	(13)	3,822	-	(3,822)
Preferred Stock Issuance
Preferred Stock Offering, Net of Costs	-	-	-	4,600,000	46	110,931	-	-	110,977	-	-	-	-	110,977	-	-
Common Units Issued for Acquisitions	-	-	-	-	-	-	-	-	-	46,404	204	-	204	204	-	-
Dividends and Distributions declared:
Common Stock ($0.23 per share)	-	-	-	-	-	-	-	(39,080)	(39,080)	-	-	-	-	(39,080)	-	-
Preferred Stock	-	-	-	-	-	-	-	(10,499)	(10,499)	-	-	-	-	(10,499)	-	-
Common Units ($0.23 per share)	-	-				-	-	-	-	-	(969)	-	(969)	(969)	-	(702)
Dividend Reinvestment Plan	2,933	-	-	-	-	14	-	-	14	-	-	-	-	14	-	-
Stock Based Compensation
Grants	566,402	5	-	-	-	1,630	-	-	1,635	-	-	-	-	1,635	-	-
Amortization	-	-	-	-	-	5,765	-	-	5,765	-	-	-	-	5,765	-	-
Contribution by Noncontrolling Interests in Consolidated Joint Venture	-	-	-	-	-	-	-	-	-	-	-	342	342	342	-	-
Deconsolidation of Consolidated Joint Ventures	-	-	-	-	-	-	-	-	-	-	-	(322)	(322)	(322)	-	-
Change in Fair Value of Derivative Instruments	-	-	-	-	-	-	(813)	-	(813)	-	-	-	-	(813)	-	-
Net Income (Loss)	-	-	-	-	-	-	-	(25,234)	(25,234)	-	(902)	(187)	(1,089)	(26,323)	-	(645)
Balance at December 31, 2011	169,969,973	1,699.00	-	7,000,000	70	1,041,027	(1,151)	(310,972)	730,673	4,206,064	16,862	307	17,169	747,842	3,064,252	14,955

63

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

[IN THOUSANDS]

	2013		2012			2011
Operating Activities:
Net Income	$	49,948	$	22,218	$	(26,968)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Gain on Acquisition of Hotel Assets, Net		(12,096)		-		-
Gain on Disposition of Hotel Assets		(32,121)		(11,231)		(991)
Impairment of Assets		10,314		-		30,165
Deferred Taxes		(5,500)		(3,355)		-
Depreciation		61,801		56,071		55,704
Amortization		2,545		3,680		3,739
Debt Extinguishment		471		2,261		145
Development Loan Interest Added to Principal		-		(678)		(2,094)
Equity in Loss (Income) of Unconsolidated Joint Ventures		1,835		2,124		(1,290)
Distributions from Unconsolidated Joint Ventures		568		1,387		132
Loss Recognized on Change in Fair Value of Derivative Instrument		22		658		125
Stock Based Compensation Expense		9,746		9,678		7,590
Change in Assets and Liabilities:
(Increase) Decrease in:
Hotel Accounts Receivable		2,419		(235)		(1,358)
Escrows		476		(1,944)		(4,378)
Other Assets		(4,269)		(2,683)		(914)
Due from Related Parties		(2,636)		(5,500)		(1,120)
Increase (Decrease) in:
Due to Related Parties		412		1,541		1,993
Accounts Payable, Accrued Expenses and Other Liabilities		6,326		(2,236)		(1,812)
Net Cash Provided by Operating Activities	$	90,261	$	71,756	$	58,668
Investing Activities:
Purchase of Hotel Property Assets	$	(217,142)	$	(67,637)	$	(167,149)
Deposits on Hotel Acquisitions, Net		(1,836)		(18,750)		(18,000)
Capital Expenditures		(42,854)		(28,443)		(26,201)
Cash Paid for Hotel Development Projects		(20,054)		(10,171)		(32,120)
Proceeds from Disposition of Hotel Properties and Investment in Unconsolidated Joint Venture		136,015		63,722		2,361
Net Changes in Capital Expenditure Escrows		(1,287)		(4,454)		(1,299)
Investment in Notes Receivable		-		(150)		-
Repayment of Notes Receivable		-		1,720		(1,570)
Proceeds from Insurance Claims		5,001		-		-
Repayment of Development Loans Receivable		15,122		8,000		-
Distributions from Unconsolidated Joint Venture		1,711		476		-
Cash paid for franchise fee intangible		-		-		(65)
Advances and Capital Contributions to Unconsolidated Joint Ventures		(150)		(130)		13,285
Net Cash Used in Investing Activities	$	(125,474)	$	(55,817)	$	(230,758)

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

64

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS]

	2013		2012		2011
Financing Activities:
Proceeds from (Repayments of) Borrowings Under Line of Credit, Net	$	-	$	(51,000)	$	5,000
Proceeds from Unsecured Term Loan Borrowing		50,000		100,000		-
Principal Repayment of Mortgages and Notes Payable		(54,398)		(187,478)		(8,193)
Proceeds from Mortgages and Notes Payable		65,000		98,695		71,278
Cash Paid for Deferred Financing Costs		(2,283)		(96)		(868)
Proceeds from Issuance of Preferred Stock, Net		72,370		-		110,977
Proceeds from Issuance of Common Stock, Net		-		128,558		-
Redemption of Preferred Stock		(60,000)		-		-
Redemption of Common Partnership Units		(1,000)		-		-
Settlement of Interest Rate Cap		(565)		-		-
Dividends Paid on Common Shares		(50,553)		(44,391)		(37,323)
Dividends Paid on Preferred Shares		(14,522)		(14,000)		(8,199)
Distributions Paid on Common Partnership Units		(1,682)		(1,736)		(1,610)
Net Cash Provided by Financing Activities	$	2,367	$	28,552		131,062
Net (Decrease) Increase in Cash and Cash Equivalents	$	(32,846)	$	44,491	$	(41,028)
Cash and Cash Equivalents - Beginning of Period		69,059		24,568		65,596
Cash and Cash Equivalents - End of Period	$	36,213	$	69,059	$	24,568

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

65

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hersha Hospitality Trust (“we” or the “Company”) was formed in May 1998 as a self-administered, Maryland real estate investment trust. We have elected to be taxed and expect to continue to elect to be taxed as a real estate investment trust, or REIT, for federal income tax purposes.

The Company owns a controlling general partnership interest in Hersha Hospitality Limited Partnership (“HHLP” or the “Partnership”), which owns a 99% limited partnership interest in various subsidiary partnerships. Hersha Hospitality, LLC (“HHLLC”), a Virginia limited liability company, owns a 1% general partnership interest in the subsidiary partnerships and the Partnership is the sole member of HHLLC.

The Partnership owns a taxable REIT subsidiary (“TRS”), 44 New England Management Company (“44 New England” or “TRS Lessee”), which leases certain of the Company’s hotels.

Hersha’s common shares of beneficial interest trade on the New York Stock Exchange (“the NYSE”) under the ticker symbol "HT", its 8.0% Series B preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR B” and its 6.875% Series C preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR C.”

As of December 31, 2013, the Company, through the Partnership and subsidiary partnerships, wholly owned 48 limited and full service hotels. All of the wholly owned hotel facilities are leased to the Company’s TRS, 44 New England.

In addition to the wholly owned hotel properties, as of December 31, 2013, the Company owned joint venture interests in another sixproperties. The properties owned by the joint ventures are leased to a TRS owned by the joint venture or to an entity owned by the joint venture partners and 44 New England. The following table lists the properties owned by these joint ventures:

Joint Venture	Ownership	Property	Location	Lessee/Sublessee
Unconsolidated Joint Ventures
Mystic Partners, LLC	66.7%	Marriott	Mystic, CT	Mystic Partners Leaseco, LLC
	8.8%	Hilton	Hartford, CT	Mystic Partners Leaseco, LLC
	66.7%	Courtyard	Norwich, CT	Mystic Partners Leaseco, LLC
	15.0%	Marriott	Hartford, CT	Mystic Partners Leaseco, LLC
SB Partners, LLC	50.0%	Holiday Inn Express	South Boston, MA	South Bay Sandeep, LLC
Hiren Boston, LLC	50.0%	Courtyard	South Boston, MA	South Bay Boston, LLC

Mystic Partners, LLC owns an interest in four hotel properties. Our interest in Mystic Partners, LLC is relative to our interest in each of the four properties owned by the joint venture as defined in the joint venture’s governing documents. Each of the four properties owned by Mystic Partners, LLC is leased to a separate entity that is consolidated in Mystic Partners Leaseco, LLC which is owned by 44 New England and our joint venture partner in Mystic Partners, LLC.

The properties are managed by eligible independent management companies, including Hersha Hospitality Management, LP (“HHMLP”). HHMLP is owned in part by certain of our trustees and executive officers and other unaffiliated third party investors.

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned TRS Lessee. All significant inter-company amounts have been eliminated.

66

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Consolidated properties are either wholly owned or owned less than 100% by the Partnership and are controlled by the Company as general partner of the Partnership. Properties owned in joint ventures are also consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (VIE) or we maintain control of the asset through our voting interest in the entity. Control can be demonstrated when the general partner has the power to impact the economic performance of the partnership, which includes the ability of the general partner to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the limited partners and the inability of the limited partnersto replace the general partner. Control can be demonstrated by the limited partners if the limited partners have the right to dissolve or liquidate the partnership or otherwise remove the general partner without cause or have rights to participate in the significant decisions made in the ordinary course of the partnership’s business.

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines of consolidation. Entities are consolidated if the determination is made that we are the primary beneficiary in a VIE or we maintain control of the asset through our voting interest or other rights in the operation of the entity. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. Based on our examination, the following entities were determined to be VIE’s: Mystic Partners, LLC; Mystic Partners Leaseco, LLC; South Bay Boston, LLC; Brisam Management DE, LLC; Hersha Statutory Trust I; and Hersha Statutory Trust II. Mystic Partners, LLC is a VIE entity, however because we are not the primary beneficiary it is not consolidated by the Company. Our maximum exposure to losses due to our investment in Mystic Partners, LLC is limited to our investment in the joint venture which is $6,210 as of December 31, 2013. Also, Mystic Partners Leaseco, LLC; and South Bay Boston, LLC lease hotel properties from our joint venture interests and are VIEs. These entities are consolidated by the lessors, the primary beneficiaries of each entity. Brisam Management DE, LLC is consolidated in our financial statements, as we are considered to be the primary beneficiary. Hersha Statutory Trust I and Hersha Statutory Trust II are VIEs but HHLP is not the primary beneficiary in these entities. Accordingly, the accounts of Hersha Statutory Trust I and Hersha Statutory Trust II are not consolidated with and into HHLP.

We allocate resources and assess operating performance based on individual hotels and consider each one of our hotels to be an operating segment. All of our individual operating segments meet the aggregation criteria. All of our other real estate investment activities are immaterial and meet the aggregation criteria, and thus, we report one segment: investment in hotel properties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (US GAAP) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Although we believe the assumptions and estimates we made are reasonable and appropriate, as discussed in the applicable sections throughout these Consolidated Financial Statements, different assumptions and estimates could materially impact our reported results. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions and changes in market conditions could impact our future operating results.

Investment in Hotel Properties

The Company allocates the purchase price of hotel properties acquired based on the fair value of the acquired real estate, furniture, fixtures and equipment, and intangible assets and the fair value of liabilities assumed, including debt. The fair value allocations were determined using Level 3 inputs, which are typically unobservable and are based on our own assumptions, as there is little, if any, related market activity. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the following estimated useful lives:

Building and Improvements          7 to 40 Years

Furniture, Fixtures and Equipment2 to 7 Years

67

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

The Company periodically reviews the carrying value of each hotel to determine if circumstances indicate impairment to the carrying value of the investment in the hotel or that depreciation periods should be modified. If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel. Based on the properties undiscounted future cash flows, the Company will determine if the investment in such hotel is recoverable. If impairment is indicated, an adjustment will be made to reduce the carrying value of the hotel to reflect the hotel at fair value.

We consider a hotel to be held for sale when management and our independent trustees commit to a plan to sell the property, the property is available for sale, management engages in an active program to locate a buyer for the property and it is probable the sale will be completed within a year of the initiation of the plan to sell.

Acquisition-related cost, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the above acquired assets. 

Investment in Unconsolidated Joint Ventures

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a VIE or our voting interest in a voting interest entity, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliates as they occur rather than as dividends or other distributions are received, limited to the extent of our investment in, advances to and commitments for the investee. Pursuant to our joint venture agreements, allocations of profits and losses of some of our investments in unconsolidated joint ventures may be allocated disproportionately as compared to nominal ownership percentages due to specified preferred return rate thresholds.

The Company periodically reviews the carrying value of its investment in unconsolidated joint ventures to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. When an impairment indicator is present, we will estimate the fair value of the investment. Our estimate of fair value takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. This determination requires significant estimates by management, including the expected cash flows to be generated by the assets owned and operated by the joint venture. To the extent impairment has occurred and the impairment is considered other than temporary, the loss will be measured as the excess of the carrying amount over the fair value of our investment in the unconsolidated joint venture.

Development Loans Receivable

Historically, the Company provided secured first-mortgage and mezzanine financing to hotel developers. Development loans receivable have been recorded at cost and reviewed for potential impairment on an on-going basis. The Company’s development loans receivable were each secured by various hotel or hotel development properties or partnership interests in hotel or hotel development properties. Historically, we have determined that the borrowers generally were not VIEs, or in the limited instances where we had determine that the borrower was a VIE, our interest did not represent a controlling financial interest. Accordingly, we did not consolidate the operating results of the borrower in our consolidated financial statements. Our evaluation of this determination was made by reviewing the sufficiency of the borrower’s equity at risk, the rights of the borrower, and which party has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. The analysis utilized by the Company in evaluating the development loans receivable involved considerable management judgment and assumptions.

A development loan receivable was considered impaired when it was probable, based on then current information, that the Company would be unable to collect all amounts due according to the loan’s contractual terms. The amount of impairment, if any, was measured by comparing the recorded amount of the loan to the present value of the expected cash flows or the fair value.

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand and in banks plus short-term investments with an initial maturity of three months or less when purchased.

68

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Escrow Deposits

Escrow deposits include reserves for debt service, real estate taxes, and insurance and reserves for furniture, fixtures, and equipment replacements, as required by certain mortgage debt agreement restrictions and provisions.

Hotel Accounts Receivable

Hotel accounts receivable consists primarily of meeting and banquet room rental and hotel guest receivables. The Company generally does not require collateral. Ongoing credit evaluations are performed and an allowance for potential losses from uncollectible accounts is provided against the portion of accounts receivable that is estimated to be uncollectible.

Deferred Financing Costs

Deferred financing costs are recorded at cost and amortized over the terms of the related indebtedness using the effective interest method.

Due from/to Related Parties

Due from/to Related Parties represents current receivables and payables resulting from transactions related to hotel management and project management with affiliated entities. Due from related parties results primarily from advances of shared costs incurred and interest receivable on development loans made to related parties. Due to affiliates results primarily from hotel management and project management fees incurred. Both due to and due from related parties are generally settled within a period not to exceed one year.

Intangible Assets and Liabilities

Intangible assets consist of leasehold intangibles for above-market value of in-place leases and deferred franchise fees. The leasehold intangibles are amortized over the remaining lease term. Deferred franchise fees are amortized using the straight-line method over the life of the franchise agreement. 

Intangible liabilities consist of leasehold intangibles for below-market value of in-place leases. The leasehold intangibles are amortized over the remaining lease term. Intangible liabilities are included in the accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets.

Development Project Capitalization

We have opportunistically engaged in the development and re-development of hotel assets. We capitalize expenditures related to hotel development projects and renovations, including indirect costs such as interest expense, real estate taxes and utilities related to hotel development projects and renovations.

Noncontrolling Interest

Noncontrolling interest in the Partnership represents the limited partner’s proportionate share of the equity of the Partnership. Income (loss) is allocated to noncontrolling interest in accordance with the weighted average percentage ownership of the Partnership during the period. At the end of each reporting period the appropriate adjustments to the income (loss) are made based upon the weighted average percentage ownership of the Partnership during the period. Our ownership interest in the Partnership as of December 31, 2013, 2012 and 2011 was 96.7%,  96.5%, and 95.9%, respectively.

We define a noncontrolling interest as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interests are reported on the consolidated balance sheets within equity, but separately from the shareholders’ equity. Revenues, expenses and net income or loss attributable to both the Company and noncontrolling interests are reported on the consolidated statements of operations.

69

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

In accordance with US GAAP, we classify securities that are redeemable for cash or other assets at the option of the holder, or not solely within the control of the issuer, outside of permanent equity in the consolidated balance sheet. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company considers the guidance in US GAAP to evaluate whether the Company controls the actions or events necessary to issue the maximum number of common shares that could be required to be delivered at the time of settlement of the contract.

We classify the noncontrolling interests of our consolidated joint ventures, consolidated variable interest entity, and certain Common Units (“Nonredeemable Common Units”) as equity. The noncontrolling interests of Nonredeemable Common Units totaled $29,523  as of December 31, 2013 and $15,484 as of December 31, 2012. As of December 31, 2013, there were 6,914,716 Nonredeemable Common Units outstanding with a fair market value of $38,515, based on the price per share of our common shares on the NYSE on such date.

In accordance with the partnership agreement of the Partnership, holders of these units may redeem them for cash unless we, in our sole and absolute discretion, elect to issue common shares on a one-for-one basis in lieu of paying cash.

Prior to February 1, 2013, certain Common Units (“Redeemable Common Units”) had been pledged as collateral in connection with a pledge and security agreement entered into by the Company and the holders of the Redeemable Common Units. The redemption feature contained in the pledge and security agreement where the Redeemable Common Units served as collateral contains a provision that could result in a net cash settlement outside of the control of the Company. As a result, prior to February 1, 2013, the Redeemable Common Units were classified in the mezzanine section of the consolidated balance sheets as they do not meet the requirements for equity classification under US GAAP. Effective February 1, 2013, the aforementioned pledge and security agreement is no longer in place and therefore these Common Units will be treated as Nonredeemable Common Units in future filings. The carrying value of the Redeemable Common Units equals the greater of carrying value based on the accumulation of historical cost or the redemption value.  As of December 31, 2013, there were no outstanding Common Units designated as Redeemable Common Units. As of December 31, 2012, the Redeemable Common Units were valued on the consolidated balance sheets at redemption value since the Redeemable Common Units redemption value was greater than historical cost of $11,753.  

Net income or loss attributed to Nonredeemable Common Units and Redeemable Common Units (collectively, “Common Units”), as well as the net income or loss related to the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity, is included in net income or loss in the consolidated statements of operations. Net income or loss attributed to the Common Units and the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity is excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

Shareholders’ Equity

On February 25, 2013, we completed a public offering of 3,000,0006.875% Series C Cumulative Redeemable Preferred Shares. These shares have a par value of $0.01 per share with a $25.00 liquidation preference per share. Net proceeds of the offering, after deducting the underwriting discount and the offering expenses payable by us, were approximately $72,370.  

We utilized the net proceeds of the offering to redeem all outstanding 8.00% Series A Cumulative Redeemable Preferred Shares on March 28, 2013, and for general corporate purposes.  The Series A Preferred Shares were redeemed at a per share redemption price of $25.00 together with accrued and unpaid dividends to the redemption date for an aggregate per share redemption price of $25.4056.  Dividends ceased accruing on the Series A Preferred Shares on March 28, 2013.

70

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Terms of the Series B and Series C Preferred Shares outstanding at December 31, 2013 and the Series A and Series B Preferred Shares outstanding at December 31, 2012 are summarized as follows:

							Dividend Per Share
	Shares Outstanding						Year Ended December 31,
Series	December 31, 2013	December 31, 2012		Aggregate Liquidation Preference	Distribution Rate		2013		2012		2011
Series A	-	2,400,000	$	60,000	8.000%	$	0.5000	$	2.0000	$	2.0000
Series B	4,600,000	4,600,000	$	115,000	8.000%	$	2.0000	$	2.0000	$	1.2400
Series C	3,000,000	-	$	75,000	6.875%	$	1.4753	$	-	$	-
	7,600,000	7,000,000

On December 20, 2012, our Board of Trustees approved the repurchase of up to an aggregate of $75,000,000 of common stock. The program was extended through December 31, 2014. As of December 31, 2013, we did not repurchase any shares pursuant to the share repurchase program.

On May 8, 2012, we closed on a public offering in which we issued and sold 24,000,000 common shares through several underwriters for net proceeds to us of approximately $128,558. Immediately upon the closing the offering, we contributed all of the net proceeds of the offering to HHLP in exchange for additional Common Units. HHLP used the net proceeds of this offering to reduce some of the indebtedness outstanding under our revolving line of credit facility and for general corporate purposes, including the funding of future acquisitions.

On August 4, 2009, we entered into a purchase agreement with Real Estate Investment Group L.P. (“REIG”), pursuant to which we sold 5,700,000 common shares at a price of $2.50 per share to REIG for gross proceeds of $14,250.  We also granted REIG the option to buy up to an additional 5,700,000 common shares at a price of $3.00 per share, which was exercisable through August 4, 2014. On February 13, 2012, pursuant to the terms of the original option, we called in and canceled the option granted to REIG in exchange for the issuance of 2,521,561 common shares with an aggregate value equal to $13,566. This amount equals the volume weighted average price per common share for the 20 trading days prior to the exercise of the option, less the $3.00 option price, multiplied by the 5,700,000 common shares remaining under the option.

On May 18, 2011, we completed a public offering of 4,600,000 8.00% Series B Cumulative Redeemable Preferred Shares (“Series B Preferred Shares”), liquidation preference $25.00 per share, including 600,000 Series B Preferred Shares subject to an overallotment option exercised by the underwriters. Net proceeds of the offering, less expenses and underwriters commissions, were approximately $110,977. Net proceeds from the offering were used to reduce some of the indebtedness outstanding under our revolving line of credit facility and to fund a portion of the purchase price of Courtyard by Marriott, Westside, Los Angeles, CA, which was acquired on May 19, 2011.

Stock Based Compensation

We measure the cost of employee service received in exchange for an award of equity instruments based on the grant-date fair value of the award. The compensation cost is amortized on a straight line basis over the period during which an employee is required to provide service in exchange for the award. The compensation cost related to performance awards that are contingent upon market based criteria being met is recorded at the fair value of the award on the date of the grant and amortized over the performance period.

Derivatives and Hedging

The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. Interest rate caps designated as cash flow hedges limit the Company’s exposure to increased cash payments due to increases in variable interest rates.

71

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Revenue Recognition

We recognize revenue and expense for all consolidated hotels as hotel operating revenue and hotel operating expense when earned and incurred. These revenues are recorded net of any sales or occupancy taxes collected from our guests. We participate in frequent guest programs sponsored by the brand owners of our hotels and we expense the charges associated with those programs, as incurred.

Interest income on development loan financing is recorded in the period earned based on the interest rate of the loan and outstanding balance during the period. Development loans receivable and accrued interest on the development loans receivable are evaluated to determine if outstanding balances are collectible. Interest is recorded only if it is determined the outstanding loan balance and accrued interest balance are collectible.

Other revenues consist primarily of fees earned for asset management services provided to hotels we own through unconsolidated joint ventures. Fees are earned as a percentage of hotel revenue and are recorded in the period earned to the extent of the noncontrolling interest ownership.

Income Taxes

The Company qualifies as a REIT under applicable provisions of the Internal Revenue Code, as amended, and intends to continue to qualify as a REIT. In general, under such provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income will not be subject to Federal income tax to the extent of the income which it distributes. Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes due primarily to differences in depreciation of hotel properties for Federal income tax purposes.

Deferred income taxes relate primarily to the TRS Lessee and are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS Lessee and their respective tax bases and for their operating loss and tax credit carry forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation. For the years ended December 31, 2012, 2011 and 2010, the Company did not record any uncertain tax positions. As of December 31, 2013, with few exceptions, the Company is subject to tax examinations by U.S. federal, state, and local income tax authorities for years 2003 through 2013.

Reclassification

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

72

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consists of the following at December 31, 2013 and December 31, 2012:

		December 31, 2013		December 31, 2012
Land	$	339,027	$	305,286
Buildings and Improvements		1,222,639		1,214,865
Furniture, Fixtures and Equipment		171,116		171,892
Construction in Progress		63,168		40,572
		1,795,950		1,732,615
Less Accumulated Depreciation		(260,115)		(265,902)
Total Investment in Hotel Properties	$	1,535,835	$	1,466,713

Depreciation expense was $61,500,  $55,956 and $55,336 (including depreciation on assets held for sale) for the years ended December 31, 2013, 2012, and 2011, respectively.

During the year ended December 31, 2013, we acquired the following wholly-owned hotel properties:

Hotel	Acquisition Date		Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Total Purchase Price
Hyatt Union Square, New York, NY*	4/9/2013	$	32,940	$	79,300	$	9,760	$	1,945	$	123,945
Courtyard by Marriott, San Diego, CA	5/30/2013		15,656		51,674		3,671		183		71,184
Residence Inn,    Coconut Grove, FL	6/12/2013		4,146		17,456		218		75		21,895
Blue Moon, Miami Beach, FL	12/20/2013		4,874		20,354		1,125		-		26,353
Winter Haven, Miami Beach, FL	12/20/2013		5,400		18,147		1,050		-		24,597
Total		$	63,016	$	186,931	$	15,824	$	2,203	$	267,974

*On April 9, 2013, we completed the acquisition of the Hyatt Union Square hotel in New York, NY from Risingsam Union Square LLC.  Consideration given in exchange for the property included$36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan of $55,000.  We recognized a net gain of approximately $12,108 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

During the year ended December 31, 2013, we paid $855 in acquisition costs related to the above acquired assets.

73

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2013 are total revenues of $22,889and a  total net income of $1,412for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition:

	Year Ended December 31,
	2013
Hotel		Revenue		Net (Loss) Income
Hyatt Union Square, New York, NY	$	11,272	$	(1,466)
Courtyard by Marriott, San Diego, CA		8,350		1,914
Residence Inn, Coconut Grove, FL		2,889		713
Blue Moon, Miami Beach, FL		175		111
Winter Haven, Miami Beach, FL		203		140
Total	$	22,889	$	1,412

During the year ended December 31, 2012, we acquired the following wholly-owned hotel and hotel development properties:

Hotel	Acquisition Date	Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Leasehold Liability		Total Purchase Price
The Rittenhouse Hotel, Philadelphia, PA	3/1/2012	$	7,119	$	29,605	$	3,580	$	2,156	$	(827)	$	42,460
The Boxer, Boston, MA	5/7/2012		1,456		14,954		1,790		-		-		18,200
Holiday Inn Express, New York, NY	6/18/2012		30,329		57,016		2,856		98		-		90,299
Courtyard by Marriot, Ewing, NJ	8/13/2012		950		9,835		1,415		30		-		12,230
Total		$	39,854	$	111,410	$	9,641	$	2,284	$	(827)	$	163,189

On August 13, 2012, the Company purchased, from an unaffiliated seller, the remaining 50% ownership in Inn America Hospitality at Ewing, LLC (“Inn at Ewing”), the owner of the Courtyard by Marriot, Ewing, NJ. Consideration given for this interest in Inn at Ewing included the assumption of the property’s mortgage debt of $12,875.

On June 18, 2012, the Company purchased, from an unaffiliated seller, the remaining 50% ownership interest in Metro 29th Street Associates, LLC (“Metro 29th”), the lessee of the Holiday Inn Express, New York, NY. Consideration given for this interest in Metro 29th included $10,000 cash and the forgiveness of approximately $800 of accrued interest payable under a mezzanine loan made by the Company to an affiliate of the seller. Brisam Management DE, LLC (“Brisam”), as the owner of the land, building and improvements leased by Metro 29th, is considered a variable interest entity and, based on our evaluation, we determined that we are the primary beneficiary of this variable interest entity and therefore Brisam is consolidated in our financial statements. As a result, we included in our consolidated financial statements approximately $90,201 in investment in hotel properties and an aggregate of $73,038 in first mortgage and mezzanine debt at acquisition. On the date we acquired the remaining interest in Metro 29th, we determined that the stated rate of interest on the first mortgage debt was above market and, accordingly, recorded a $3,436 premium. Also included in this transaction was an option to acquire the equity interests in the entity owning the real estate assets or the real estate assets from Brisam for nominal consideration. The option is exercisable by the Company after September 1, 2016 or before that date in the event of certain specified events. The equity interest may be put to the Company by the Seller at any time. On June 29, 2012, the Company repaid the $15,000 mezzanine debt.

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2012 are total revenues of $31,393 and total net income of $1,085 for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition: 

74

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

	Year Ended December 31,
	2013				2012
Hotel	Revenue		Net (Loss) Income		Revenue		Net (Loss) Income
The Rittenhouse Hotel, Philadelphia, PA	$	17,395	$	(2,827)	$	16,812	$	(1,834)
The Boxer, Boston, MA		3,799		(241)		2,791		574
Holiday Inn Express, New York, NY		16,746		1,541		10,170		2,142
Courtyard by Marriot, Ewing, NJ		4,210		875		1,620		203
Total	$	42,150	$	(652)	$	31,393	$	1,085

Pro Forma Results (Unaudited)

The following condensed pro forma financial data are presented as if all acquisitions completed since January 1, 2013 and 2012 had been completed on January 1, 2012 and 2011. Properties acquired without any operating history are excluded from the condensed pro forma operating results. The condensed pro forma financial data is not necessarily indicative of what actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2013 and 2012 at the beginning of the year presented, nor do they purport to represent the results of operations for future periods.

	Year Ended December 31,
	2013		2012
Pro Forma Total Revenues	$	353,407	$	331,587
Pro Forma Income from Continuing Operations	$	22,651	$	7,408
(Loss) Income from Discontinued Operations		29,195		14,720
Pro Forma Net Income		51,846		22,128
Loss Allocated to Noncontrolling Interest		271		(154)
Preferred Distributions		(14,611)		(14,000)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares		(2,250)		-
Pro Forma Net (Loss) Income Applicable to Common Shareholders	$	35,256	$	7,974
Pro Forma Income Applicable to Common Shareholders per Common Share
Basic	$	0.18	$	0.04
Diluted	$	0.18	$	0.04
Weighted Average Common Shares Outstanding
Basic		198,390,450		187,415,270
Diluted		201,918,177		187,415,270

75

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

Asset Development and Renovation

The Company has opportunistically engaged in development of hotel assets. On July 22, 2011, the Company completed the acquisition of the real property and improvements located at 32 Pearl Street, New York, NY, anticipated to become a Hampton Inn, from an unaffiliated seller for a total purchase price of $28,300. The property is a re-development project which was initiated in 2008.

In January 2014, the Company completed construction of an additional oceanfront tower, additional meeting space and structured parking on a land parcel adjacent to the Courtyard by Marriott, Miami, Florida, a hotel acquired on November 16, 2011. This land parcel was included in the acquisition of the hotel.

We capitalize expenditures related to hotel development projects and renovations, including indirect costs such as interest expense, real estate taxes and utilities related to hotel development projects and renovations.

We have capitalized the following indirect development costs for the years ended December 31, 2013, 2012 and 2011:

	Year Ended December 31,
	2013		2012		2011
Property Tax	$	388	$	296	$	218
Interest Expense		1,318		1,542		1,372
Utility		3		9		201
Total	$	1,709	$	1,847	$	1,791

In October 2012, Hurricane Sandy affected numerous hotels  within our portfolio. Two hotels within our portfolio were significantly impacted by this natural disaster; one hotel was inoperable (Holiday Inn Express Water Street, New York, NY) and one hotel development project has incurred delays in construction (Hampton Inn, Pearl Street, New York, NY). We have recorded estimated property losses of $1,586 on the Holiday Inn Express Water Street and a corresponding insurance claim receivable of $1,486.  This hotel re-opened in April 2013.  We have recorded estimated property losses of $1,997 on the Hampton Inn Pearl Street and a corresponding insurance claim receivable of $1,897, and we expect this hotel to open in the first quarter of 2014.  Of the $6,546in aggregate insurance claims that we estimate to receive,  $4,840 was received as of December 31, 2013.  These aggregate claims include property losses and remediation costs.

Purchase and Sale Agreements

On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties. On December 18, 2013, we completed the sale of 12 of the 16 properties.See “Note 12 – Discontinued Operations” for more information.

On October 16, 2013, the Company entered into a purchase and sale agreement to acquire the Hotel Oceana, located in Santa Barbara, California, from an unaffiliated seller for approximately $42,000, including the assumption of $25,250 in mortgage debt.  This transaction is expected to close by the end of first quarter 2014. 

In February 2014, the Company entered into a purchase and sale agreement to sell the Hotel 373, New York, NY to an unaffiliated buyer for a total purchase price of $37,000.  This property was acquired by the Company in June 2007.  Due to the events of this transaction occurring after December 31, 2013, the Company did not classify this property as a discontinued asset as of December 31, 2013, and accordingly the operating results have not been reclassified for periods presented.

76

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of December 31, 2013 and December 31, 2012 our investment in unconsolidated joint ventures consisted of the following:

		Percent	Preferred		December 31,		December 31,
Joint Venture	Hotel Properties	Owned	Return		2013		2012
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50.0%	N/A	$	1,057	$	1,292
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50.0%	N/A		4,777		4,964
Mystic Partners, LLC	Hilton and Marriott branded hotels in CT	8.8%-66.7%	8.5% non-cumulative		6,210		9,751
				$	12,044	$	16,007

In 2013, we recorded an impairment loss of $1,813 related to the Courtyard, Norwich, CT, one of the properties owned by Mystic Partners, LLC.  Mystic Partners, LLC is currently in discussions to transfer title to the property to the lender.  As we do not anticipate recovering our investment balance in this asset, we have reduced the portion of our Mystic Partners, LLC investment related to this property to $0 as of December 31, 2013.

On February 1, 2013, the Company closed on the sale of its interest in one of the unconsolidated joint venture properties owned in part by Mystic Partners, LLC to its joint venture partner. As our investment in this unconsolidated joint venture equated the net proceeds distributed to us, we did not record a gain or loss in connection with the sale of this hotel.

As noted in “Note 2 – Investment in Hotel Properties,” on August 13, 2012, the Company purchased the remaining 50% ownership interest in Inn America Hospitality at Ewing, the lessee of the Courtyard by Marriot, Ewing, NJ. As such, we ceased to account for our investment in Inn America Hospitality at Ewing under the equity method of accounting as of August 13, 2012 because it became a consolidated subsidiary. Our interest in Inn America Hospitality at Ewing, which consisted of our investment in Inn America Hospitality at Ewing and a receivable, was remeasured and as a result based on the appraised value of the hotel, we recorded a loss of approximately $1,668 during the twelve months ended December 31, 2012.

As noted in “Note 2 – Investment in Hotel Properties,” on June 18, 2012, the Company purchased the remaining 50% ownership interest in Metro 29th, the lessee of the Holiday Inn Express, Manhattan, New York, NY. As such, we ceased to account for our investment in Metro 29th under the equity method of accounting as of June 18, 2012 because it became a consolidated subsidiary. Our interest in Metro 29th was remeasured, and as a result, we recorded a loss of approximately $224.

Fair value for our previously held investments in Inn America Hospitality at Ewing and Metro 29th was determined through the use of an income approach and was measured using Level 3 inputs. The income approach estimates an income stream for a hotel property (typically 5 years) and discounts this income plus a reversion (presumed sale) into a present value at a risk adjusted rate. RevPAR growth assumptions utilized in this approach are derived from market transactions as well as other financial and industry data. The terminal cap rate and discount rate are significant inputs to this valuation. The fair value measurements determined during the year included RevPAR growth assumptions ranging between 3% and 8%, terminal cap rates ranging between 8.5% and 9.5%, and discount rates of 10.5%. Changes in these inputs could result in a significant change in the valuation of our original joint venture investments and a change in the loss from remeasurement of investment in unconsolidated joint venture recognized during the period.

On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture. As a result of entering into these purchase and sale agreements, during the twelve months ended December 31, 2011, we recorded an impairment loss of approximately $1,677 for those hotel properties for which our investment in the unconsolidated joint venture did not exceed the net proceeds distributable to us on the sale of the hotel properties held by the joint venture based on the purchase price. On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three of the unconsolidated joint venture hotel properties. On May 8, 2012, the Company closed on the remaining four non-core hotel properties, including one of the unconsolidated joint venture hotel properties. As our investment in these unconsolidated joint ventures equated the net proceeds distributed to us, we did not record a gain or loss in connection with the sale of these hotel properties. See “Note 12 – Discontinued Operations” for more information.

77

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

Income or loss from our unconsolidated joint ventures is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets.

Income (loss) recognized during the years ended December  31, 2013, 2012, and 2011, for our investments in unconsolidated joint ventures is as follows:

	Year Ended December 31,
		2013		2012		2011
SB Partners, LLC	$	264	$	85	$	(171)
Hiren Boston, LLC		113		230		158
Mystic Partners, LLC		(399)		(433)		(364)
Inn American Hospitality at Ewing LLC		-		-		(28)
Metro 29th Street Associates, LLC		-		(114)		615
(Loss) Income from Unconsolidated Joint Venture Investments		(22)		(232)		210
Impairment from Unconsolidated Joint Ventures		(1,813)		-		(1,677)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Ventures		-		(1,892)		2,757
(Loss) Income from Unconsolidated Joint Venture Investments	$	(1,835)	$	(2,124)	$	1,290

On June 20, 2011, Hiren Boston, LLC refinanced its debt with a third party institutional lender and, as a result, our mortgage interest in the property was terminated and the outstanding principal balance of $13,750 was repaid to us in full. We have determined that we were no longer the primary beneficiary of Hiren Boston, LLC and it is no longer a consolidated subsidiary of the Company and we have begun to account for our investment in Hiren Boston, LLC under the equity method of accounting. Our interest in Hiren Boston, LLC has been remeasured and, as a result, we have recorded a gain of approximately $2,757 for the twelve months ended December 31, 2011. The fair value of our interest in Hiren Boston, LLC was based on a third party appraisal, which utilized the market approach.

The Mystic Partners, LLC joint venture agreement provides for an 8.5% non-cumulative preferred return based on our contributed equity interest in the venture. Cash distributions will be made from cash available for distribution, first, to us to provide an 8.5% annual non-compounded return on our unreturned capital contributions and then to our joint venture partner to provide an 8.5% annual non-compounded return of their unreturned contributions. Any remaining cash available for distribution will be distributed to us 10.5% with respect to the net cash flow from the Hartford Marriott, 7.0% with respect to the Hartford Hilton and 56.7%, with respect to the remaining two properties. Mystic Partners, LLC allocates income to us and our joint venture partner consistent with the allocation of cash distributions in accordance with the joint venture agreements.

Each of the Mystic Partners, LLC hotel properties, except the Hartford Hilton, is under an Asset Management Agreement with 44 New England to provide asset management services. Fees for these services are paid monthly to 44 New England and recognized as income in the amount of 1% of operating revenues, except for the Hartford Marriott which is 0.25% of operating revenues.

The Company and our joint venture partner in Mystic Partners, LLC jointly and severally guarantee the performance of the terms of a loan to Adriaen’s Landing Hotel, LLC, owner of the Hartford Marriott, in the amount of $50,000, and 315 Trumbull Street Associates, LLC, owner of the Hartford Hilton, in the amount of $27,000, if at any time during the term of the note and during such time as the net worth of Mystic Partners falls below the amount of the guarantee. We have determined that the probability of incurring loss under this guarantee is remote and the value attributed to the guarantee is de minimis.

78

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following tables set forth the total assets, liabilities, equity and components of net income or loss, including the Company’s share, related to the unconsolidated joint ventures discussed above as of December 31, 2013 and December 31, 2012 and for the years ended December 31, 2013, 2012, and 2011.

Balance Sheets
		December 31,		December 31,
		2013		2012
Assets
Investment in Hotel Properties, Net	$	114,221	$	118,506
Other Assets		19,146		20,709
Assets Held For Sale		-		5,875
Total Assets	$	133,367	$	145,090
Liabilities and Equity
Mortgages and Notes Payable	$	112,654	$	119,236
Other Liabilities		37,464		36,292
Liabilities Related to Assets Held For Sale		-		6,071
Equity:
Hersha Hospitality Trust		26,230		28,581
Joint Venture Partner(s)		(42,981)		(45,090)
Total Equity		(16,751)		(16,509)
Total Liabilities and Equity	$	133,367	$	145,090

Statements of Operations
	Year Ended December 31,
		2013		2012		2011
Room Revenue	$	58,273	$	62,058	$	63,896
Other Revenue		22,606		22,306		21,945
Operating Expenses		(55,179)		(57,131)		(56,607)
Interest Expense		(7,526)		(7,650)		(7,272)
Lease Expense		(996)		(3,729)		(5,505)
Property Taxes and Insurance		(3,034)		(3,438)		(4,280)
General and Administrative		(5,794)		(5,904)		(5,680)
Depreciation and Amortization		(6,697)		(6,533)		(6,034)
Loss Allocated to Noncontrolling Interests		(179)		(2,614)		(44)
Net Income from Continuing Operations		1,474		(2,635)		419
(Loss) Income from Discontinued Operations		(55)		121		1,503
Gain on Disposition of Hotel Properties		1,161		25,131		-
Net Income	$	2,580	$	22,617	$	1,922

79

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following table is a reconciliation of the Company’s share in the unconsolidated joint ventures’ equity to the Company’s investment in the unconsolidated joint ventures as presented on the Company’s balance sheets as of December 31, 2013 and December 31, 2012.

		December 31,		December 31,
		2013		2012
Company's share of equity recorded on the joint ventures' financial statements	$	26,230	$	28,581
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)		(14,186)		(12,574)
Investment in Unconsolidated Joint Ventures	$	12,044	$	16,007

(1)  Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:

· cumulative impairment of the Company’s investment in joint ventures not reflected on the joint ventures' financial statements;

· the Company’s basis in the investment in joint ventures not recorded on the joint ventures' financial statements; and

· accumulated amortization of the Company’s equity in joint ventures that reflects the Company’s portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures financial statements (this excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on the Company’s consolidated statement of operations).

80

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 4 – DEVELOPMENT LOANS RECEIVABLE

Development Loans

Historically, we provided first mortgage and mezzanine loans to hotel developers. These loans were initially originated as part of our acquisition strategy. During the years ended December 31, 2013 and 2012, no such loans were originated by us. Interest income from development loans was $158, $1,998, and $3,427for the years ended December 31, 2013, 2012, and 2011, respectively. No interest accrued on development loans in 2013. Accrued interest on our development loans receivable was $348 as of December 31, 2012.

As of December 31, 2013 we had no development loans outstanding and as of December 31, 2012, our development loans receivable consisted of the following:

Hotel Property	Borrower		Principal Outstanding December 31, 2013		Principal Outstanding December 31, 2012	Interest Rate		Maturity Date
Operational Hotels
Hyatt 48Lex - New York, NY*	44 Lexington Holding, LLC	$	-	$	15,122	9%	(1)	N/A
Construction Hotels
Hyatt Union Square - New York, NY (2)	Risingsam Union Square, LLC		-		13,303	10%		N/A
Total Development Loans Receivable		$	-	$	28,425

*Indicates borrower is a related party

(1)Prior to June 1, 2012, the development loan to 44 Lexington Holding LLC allowed the borrower to elect, quarterly, to pay accrued interest in-kind by adding the accrued interest to the principal balance of the loan.  Effective June 1, 2012, we amended the development loan with 44 Lexington Holding LLC to cease the buyer’s election to pay accrued interest in-kind.  Interest of $678 was added to principal during the year ended December 31, 2012.

(2)On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY from Risingsam Union Square, LLC.  Consideration given in exchange for the property including $36,000 paid in cash to the seller and our cancellationof a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan.  See “Note 2 –Investment In Hotel Properties” for additional discussion of this transaction. 

Advances and repayments on our development loans receivable consisted of the following for the years ended December 31, 2013, 2012, and 2011:

	2013	2012	2011
Balance at January 1,	$          28,425	$          35,747	$           41,653
Interest added to principal	-	678	2,094
Repayments	(15,122)	(8,000)	-
Principal exchanged for interest in hotel properties	(13,303)	-	(8,000)
Balance at December 31,	$                     -	$          28,425	$           35,747

81

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 5 – OTHER ASSETS AND DEPOSITS ON HOTEL ACQUISITIONS

Other Assets

Other Assets consisted of the following at December 31, 2013 and December 31, 2012:

	December 31, 2013		December 31, 2012
Transaction Costs	$	115	$	339
Acquisition of Hyatt Union Square		-		3,120
Investment in Statutory Trusts		1,548		1,548
Prepaid Expenses		9,256		8,654
Insurance Claims Receivable		1,706		3,883
Deferred Tax Asset, Net of Valuation Allowance of $804		8,766		3,355
Other		6,069		4,615
	$	27,460	$	25,514

Transaction Costs - Transaction costs include legal fees and other third party transaction costs incurred relative to entering into debt facilities, issuances of equity securities, and other costs which are recorded in other assets prior to the closing of the respective transactions.

Acquisition of Hyatt Union Square - On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY.  Included in the acquisition of Hyatt Union Square above are costs we incurred for preliminary development of the hotel.

Investment in Statutory Trusts - We have an investment in the common stock of Hersha Statutory Trust I and Hersha Statutory Trust II. Our investment is accounted for under the equity method.

Prepaid Expenses - Prepaid expenses include amounts paid for property tax, insurance and other expenditures that will be expensed in the next twelve months.

Insurance Claims Receivable – As noted in “Note 2 – Investment in Hotel Properties,” we recorded an insurance claim receivable due to the property damage that occurred at several of our hotel properties as a result of Hurricane Sandy in October 2012.

Deferred Tax Asset - We have approximately $8,766 of net deferred tax assets as of December  31, 2013. We have considered various factors, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies in determining a valuation allowance for our deferred tax assets, and we believe that it is more likely than not that we will be able to realize the $8,766 of net deferred tax assets in the future.

Deposits on Hotel Acquisitions

As of December 31, 2013, we had $15,486 in interest bearing deposits related to the future acquisition of the Hilton Garden Inn -52nd Street, New York, NY.  On October 24, 2012, we entered into a purchase and sale agreement to acquire the Hilton Garden Inn – 52nd Street in New York, NY for total consideration of $74,000. As of December  31, 2013, we had provided $15,486 to the seller as a deposit earning 10% per annum and we may fund an additional $1,514 deposit earning 10% per annum. The total consideration to the seller will consist of this $17,000 interest bearing deposit, an additional $15,000 cash to be paid to the seller upon closing and the assumption or extinguishment of a mortgage loan secured by the hotel in the original aggregate principal amount of $42,000.  This transaction is expected to close shortly after the developer completes the hotel’s construction, which is anticipated for the first quarter of 2014. While this purchase and sale agreement secures the Company’s right to acquire the completed hotel, the Company is not assuming any significant construction risk, including the risk of schedule and cost overruns.

As of December 31, 2013, we had $3,100 in interest bearing deposits related to the future acquisition of the Hotel Oceana, located in Santa Barbara, California (See “Note 2 – Investment in Hotel Properties” for more information).

82

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 5 – OTHER ASSETS AND DEPOSITS ON HOTEL ACQUISITIONS (CONTINUED)

As of December 31, 2012, our Deposits on Hotel Acquisitions consisted of $21,000 in non-interest bearing deposits related to the acquisition of the Hyatt Union Square, New York, NY,  $15,000 in interest bearing deposits related to the future acquisition of Hilton Garden Inn -52nd Street, New York, NY and $1,750 in interest bearing deposits related to the potential acquisition of another hotel property.

83

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 6 – DEBT

Mortgages

We had total mortgages payable at December 31, 2013 and December 31, 2012 of $617,788(including $45,835 in outstanding mortgage indebtedness related to assets held for sale)and$641,160, respectively. These balances consisted of mortgages with fixed and variable interest rates, which ranged from 3.79% to 8.25% as of December 31, 2013. Included in these balances are net premiums of $2,466 and$3,245 as of December 31, 2013 and December 31, 2012, respectively, which are amortized over the remaining life of the loans. Aggregate interest expense incurred under the mortgage loans payable totaled $34,854,  $38,343, and $39,786 during the years ended December 31, 2013, 2012, and 2011, respectively.

Our mortgage indebtedness contains various financial and non-financial covenants customarily found in secured, non-recourse financing arrangements. Our mortgage loans payable typically require that specified debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, the lender may be able to escrow cash flow generated by the property securing the applicable mortgage loan. We have determined that certain debt service coverage ratio covenants contained in the loan agreements securing seven of our hotel properties were not met as of December 31, 2013. Pursuant to these loan agreements, the lender has elected to escrow the operating cash flow for a number of these properties. However, these covenants do not constitute an event of default for these loans.

As of December 31, 2013, the maturity dates for the outstanding mortgage loans ranged from October 2014 to February 2018.

Subordinated Notes Payable

We have two junior subordinated notes payable in the aggregate amount of $51,548 to the Hersha Statutory Trusts pursuant to indenture agreements which will mature on July 30, 2035, but may be redeemed at our option, in whole or in part, prior to maturity in accordance with the provisions of the indenture agreements.  The $25,774 notes issued to Hersha Statutory Trust I and Hersha Statutory Trust II, bear interest at a variable rate of LIBOR plus 3% per annum.  This rate resets two business days prior to each quarterly payment.  The weighted average interest rate on our two junior subordinated notes payable during the years ended December 31, 2013, 2012, and 2011 was 3.32%,  3.51%, and 3.35%, respectively.  Interest expense in the amount of $1,712,  $1,810, and $1,727 was recorded for the years ended December 31, 2013, 2012, and 2011, respectively.

Credit Facilities

On November 5, 2012, we entered into a senior unsecured credit agreement with Citigroup Global Markets Inc. and various other lenders. The credit agreement provides for a $400,000 senior unsecured credit facility consisting of a $250,000 senior unsecured revolving line of credit, and a $150,000 senior unsecured term loan. Our previous $250,000senior secured credit facility was terminated and replaced by the $400,000 unsecured credit facility, and, as a result, all amounts outstanding under our $250,000 secured credit facility were repaid with borrowings from our $400,000 unsecured credit facility. The $400,000 unsecured credit facility expires on November 5, 2015, and, provided no event of default has occurred and remains uncured, we may request that the lenders renew the credit facility for two additional one-year periods. The credit facility is also expandable to $550,000 at our request, subject to the satisfaction of certain conditions.

The amount that we can borrow at any given time on our credit facility is governed by certain operating metrics of designated unencumbered hotel properties known as borrowing base assets. As of December 31, 2013, the following hotel properties were borrowing base assets:

- Holiday Inn Express, Cambridge, MA	- Hampton Inn, Philadelphia, PA
- Holiday Inn, Wall Street, NY	- Hampton Inn, Washington, DC
- Holiday Inn Express, Times Square, NY	- Hyatt Place, King of Prussia, PA
- Residence Inn, Norwood, MA	- Nu Hotel, Brooklyn, NY
- Residence Inn, Framingham, MA	- The Rittenhouse Hotel, Philadelphia, PA
- Sheraton, Wilmington South, DE	- The Boxer, Boston, MA
- Sheraton Hotel, JFK Airport, New York, NY	- Holiday Inn Express (Water Street), New York, NY
- Candlewood Suites, Times Square, NY	- Courtyard, San Diego, CA
- Hampton Inn, Times Square, NY	- Residence Inn, Coconut Grove, FL

84

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 6 – DEBT (CONTINUED)

The interest rate for the $400,000 unsecured credit facility is based on a pricing grid with a range of one month U.S. LIBOR plus 1.75% to 2.65%. As of December 31, 2013, we had borrowed $150,000 in unsecured term loans under the unsecured credit facility, and had entered into interest rate swaps which effectively fix the interest rate on these term loans at a blended rate of3.217%. See “Note 8 – Fair Value Measurements and Derivative Instruments” for more information.

The credit agreement providing for the $400,000 unsecured credit facility includes certain financial covenants and requires that we maintain: (1) a minimum tangible net worth of $1,000,000, which is calculated by adding back accumulated depreciation to the recorded value of our investment in hotel properties and subtracting certain intangible assets and debt and is subject to increases under certain circumstances; (2) annual distributions not to exceed 95% of adjusted funds from operations; and (3) certain financial ratios, including the following:

·a fixed charge coverage ratio of not less than 1.45 to 1.00, which increases to 1.50 to 1.00 as of January 1, 2014;

·a maximum leverage ratio of not more than 60%; and

·a maximum secured debt leverage ratio of 55%, which decreased to 50% as of October 1, 2013 and further decreases to 45% as of October 1, 2014.

The Company is in compliance with each of the covenants listed above as of December 31, 2013. As of December 31, 2013, our remaining borrowing capacity under the new credit facility was $244,175, based on our current borrowing base assets.

As of December 31, 2013, the outstanding unsecured term loan balance under the $400,000 credit facility was $150,000 and we had outstanding borrowings of $0 on the revolving line of credit. As of December 31, 2012, the outstanding unsecured term loan was $100,000 and the revolving line of credit had no balance outstanding.

The Company recorded interest expense of $5,413,  $2,405, and $2,103 related to borrowings drawn on each of the aforementioned credit facilities, for the years ended December 31, 2013, 2012, and 2011, respectively. The weighted average interest rate on our credit facilities was 3.08%,  4.57%, and 4.43% for the years ended December 31, 2013, 2012, and 2011, respectively.

Subsequent to December 31, 2013, the Company has received a commitment from its existing bank group and is in the process of amending the current $400,000 credit facility which would allow the Company to increase the size of the facility while simultaneously extending the tenor and reducing the pricing. The revised credit facility is expected to close by the end of the first quarter of 2014, subject to lender approval.

On November 5, 2010, we entered into a Revolving Credit Loan and Security Agreement with T.D. Bank, NA and various other lenders, which provided for a senior secured revolving credit facility in the principal amount of up to $250,000, including a sub-limit of $25,000 for irrevocable stand-by letters of credit and a $10,000 sub-limit for the swing line loans. The $250,000 revolving credit facility was collateralized by a first lien-security interest in all existing and future unencumbered assets of HHLP, a collateral assignment of all hotel management contracts of the management companies in the event of default, and title-insured, first-lien mortgages on several hotel properties.

Aggregate annual principal payments for the Company’s credit facility and mortgages and subordinated notes payable for the five years following December 31, 2013 and thereafter are as follows:

Year Ending December 31,	Amount
2014	$	17,500
2015		250,188
2016		302,648
2017		181,184
2018		13,802
Thereafter		51,548
Net Unamortized Premium		2,466
	$	819,336

85

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 6 – DEBT (CONTINUED)

Capitalized Interest

We utilize mortgage debt and our $400,000 revolving credit facility to finance on-going capital improvement projects at our hotels. Interest incurred on mortgages and the revolving credit facility that relates to our capital improvement projects iscapitalized through the date when the assets are placed in service. For the years ended December 31, 2013, 2012, and 2011, we capitalized $1,320,  $1,542, and $1,372 respectively, of interest expense related to these projects.

Deferred Financing Costs

Costs associated with entering into mortgages and notes payable and our revolving line of credit are deferred and amortized over the life of the debt instruments. Amortization of deferred financing costs is recorded in interest expense.   As of December 31, 2013, deferred costs were $7,570, net of accumulated amortization of $7,070. Amortization of deferred costs for the years ended December 31, 2013, 2012, and 2011was $2,886,  $2,991, and$3,535 respectively.

Debt Payoff

On January 3, 2013, we funded an additional $50,000 in unsecured term loan borrowings under our $400,000 unsecured credit facility which was used to pay off the balance of the mortgage loan secured by the Holiday Inn Express, Times Square, New York, NY.  This mortgage was also subject to an interest rate swap, which was terminated as a cash flow hedge as of December 31, 2012 due to this payoff.  As a result of this payoff, we expensed $261 in unamortized deferred financing costs and fees, which are included in the Loss on Debt Extinguishment caption of the consolidated statements of operations for the year ended December 31, 2013.

On June 30, 2013, we repaid $7,928 on our mortgage with Berkadia Commercial Mortgage, LLC for the Residence Inn, Tysons Corner, VA property.  The loan was due to mature in July 2013, and we incurred no loss on debt extinguishment in paying off the loan.

On January 7, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012. Therefore, the accumulated other comprehensive loss on this swap as of December 31, 2012, was reclassified to income and we recorded $530 in the Loss on Debt Extinguishment on the statement of operations for the year ended December 31, 2012.

As previously mentioned, we replaced our previous $250,000 secured credit facility with a new $400,000 unsecured credit facility with Citigroup Global Markets Inc. and various other lenders on November 5, 2012. Concurrently with this closing, we funded $100,000 in unsecured term loan borrowings. These borrowings were used to pay off in full the balance on seven mortgage loans on hotel properties. As a result of terminating our previous $250,000 secured credit facility and extinguishing the debt on these seven properties, we expensed $2,410 in unamortized deferred financing costs and fees, which are included in the Loss of Debt Extinguishment caption on the consolidated statements of operations for the year ended December 31, 2012. On January 3, 2013, we funded an additional $50,000 in unsecured term loan borrowings under our $400,000 unsecured credit facility which were used to payoff the balance of the mortgage loan secured by the Holiday Inn Express, Times Square, New York, NY. This mortgage was also subject to an interest rate swap, which was derecognized as a cash flow hedge as of December 31, 2012 due to this payoff. See “Footnote 8 – Fair Value Measurements and Derivative Instruments” for more information.

New Debt/Refinance

On January, 31, 2014, we paid down $5,175 of the outstanding debt and modified the mortgage loan on the Duane Street Hotel, New York, NY. As a result, we entered into a $9,500 loan with a maturity date of February 1, 2017. The modified loan bears interest at a variable rate of one month U.S. dollar LIBOR plus 4.50%. The modification also includes an interest rate swap, which effectively fixes the interest rate at 5.433%.  As a result of this modification, we anticipate expensing $65 in unamortized deferred financial costs and fees during the first quarter of 2014.  

86

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 6 – DEBT (CONTINUED)

On April 24, 2013, we modified the $30,000 mortgage loan on the Courtyard by Marriott, Westside, Los Angeles, CA.  The modified loan bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.00%, and matures on September 29, 2017.  The modification also contains an option for the Company to advance $5,000 in principal subject to certain conditions, including there being no event of default and compliance with debt service coverage ratio requirements. As a result of this modification, we incurred a loss on debt extinguishment of $284.  This modification did not change the terms of the interest rate swap that we entered into in 2011, which had effectively fixed the interest at 4.947%, and now effectively fixes the interest at 4.10% through September 29, 2015.  After the maturity date of the swap, the loan will bear interest at the stated variable rate of one-month U.S. dollar LIBOR plus 3.00,  with a LIBOR floor of 0.75%.  See “Note 8 – Fair Value Measurements and Derivative Instruments” for more information.

On January 31, 2012, we repaid outstanding mortgage debt with an original principal balance of $32,500 secured by the Capitol Hill Suites, Washington, D.C., incurring a loss on debt extinguishment of approximately $7and simultaneously entered into a new mortgage obligation of $27,500.  The new mortgage debt bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.25% and matures on February 1, 2015.  On the same date, we entered into an interest rate swap that effectively fixes the interest at 3.79% per annum.

On May 9, 2012, we repaid outstanding mortgage debt with a principal balance of $29,730 secured by the Courtyard by Marriott, Miami, FL.  On July 2, 2012, we entered into a new mortgage with an initial obligation of $45,000, with three additional draws of $5,000 every 90 days to fund the construction of the new oceanfront tower as described in “Note 2 – Investment in Hotel Properties”.  The new mortgage debt bears interest at a variable rate of one month U.S. LIBOR plus 3.50% and matures on July 1, 2016.  Also on July 2, 2012, we entered into an interest rate cap that effectively limits interest to 4.32% per annum.

On May 23, 2012, we repaid outstanding mortgage debt with an original principal balance of $22,000 secured by the Hotel 373, Fifth Avenue, NY, and on May 24, 2012 entered into a new mortgage obligation of $19,000, incurring a loss on debt extinguishment of approximately $66.  The new mortgage debt bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.85% and matures on June 1, 2017.  In conjunction with this refinance, we entered into an interest rate cap  that matures on June 1, 2015 that effectively limits interest to 5.85% per annum.

As a result of our acquisition of Metro 29th, first mortgage debt with a principal balance of $54,602 secured by the Holiday Inn Express, New York, NY is included on our consolidated balance sheet.  This debt bears interest at a fixed rate of 6.50% and matures on November 5, 2016.  In addition, we consolidated mezzanine debt with a principal balance of $15,000.  We repaid this mezzanine debt on June 29, 2012 and incurred a loss on debt extinguishment of approximately $176.

87

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 7 – COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

Management Agreements

Our wholly-owned taxable REIT subsidiary ("TRS"), 44 New England, engages eligible independent contractors in accordance with the requirements for qualification as a REIT under the internal revenue code of 1986, as amended, including HHMLP, as the property managers for hotels it leases from us pursuant to management agreements. HHMLP is owned, in part, by certain executives and trustees of the Company. Our management agreements with HHMLP provide for five-year terms and are subject to early termination upon the occurrence of defaults and certain other events described therein. As required under the REIT qualification rules, HHMLP must qualify as an “eligible independent contractor” during the term of the management agreements. Under the management agreements, HHMLP generally pays the operating expenses of our hotels. All operating expenses or other expenses incurred by HHMLP in performing its authorized duties are reimbursed or borne by our TRS to the extent the operating expenses or other expenses are incurred within the limits of the applicable approved hotel operating budget. HHMLP is not obligated to advance any of its own funds for operating expenses of a hotel or to incur any liability in connection with operating a hotel. Management agreements with other unaffiliated hotel management companies have similar terms.

For its services, HHMLP receives a base management fee and, if a hotel exceeds certain thresholds, an incentive management fee. The base management fee for a hotel is due monthly and is equal to 3% of gross revenues associated with each hotel managed for the related month. The incentive management fee, if any, for a hotel is due annually in arrears on the ninetieth day following the end of each fiscal year and is based upon the financial performance of the hotels. For the years ended December 31, 2013, 2012, and 2011, base management fees incurred totaled $11,713,  $10,781, and $9,190 respectively, and are recorded as Hotel Operating Expenses. For the years ended December 31, 2013, 2012, and 2011, we did not incur incentive management fees.

Franchise Agreements

Our branded hotel properties are operated under franchise agreements assumed by the hotel property lessee. The franchise agreements have 10 to 20 year terms, but may be terminated by either the franchisee or franchisor on certain anniversary dates specified in the agreements. The franchise agreements require annual payments for franchise royalties, reservation, and advertising services, and such payments are based upon percentages of gross room revenue. These payments are paid by the hotels and charged to expense as incurred. Franchise fee expense for the years ended December 31, 2013, 2012, and 2011 were $26,247,  $24,278, and $22,729 respectively, and are recorded in Hotel Operating Expenses. The initial fees incurred to enter into the franchise agreements are amortized over the life of the franchise agreements.

Accounting and Information Technology Fees

Each of the wholly-owned hotels and consolidated joint venture hotel properties managed by HHMLP incurs a monthly accounting and information technology fee. Monthly fees for accounting services are between $2 and $3 per property and monthly information technology fees range from $1 to $2 per property. For the years ended December 31, 2013, 2012, and 2011, the Company incurred accounting fees of $1,739,  $1,741, and $1,822 respectively. For the years ended December 31, 2013, 2012, and 2011, the Company incurred information technology fees of $510,  $509, and $460 respectively. Accounting fees and information technology fees are included in Hotel Operating Expenses.

Capital Expenditure Fees

HHMLP charges a 5% fee on all capital expenditures and pending renovation projects at the properties as compensation for procurement services related to capital expenditures and for project management of renovation projects. For the years ended December 31, 2013, 2012, and 2011, we incurred fees of $1,459,  $1,076, and $1,208 respectively, which were capitalized with the cost of fixed asset additions.

Acquisitions from Affiliates

We have entered into an option agreement with each of our officers and certain trustees such that we obtain a right of first refusal to purchase any hotel owned or developed in the future by these individuals or entities controlled by them at fair market value. This right of first refusal would apply to each party until one year after such party ceases to be an officer or trustee of the Company. Our Acquisition Committee of the Board of Trustees is comprised solely of independent trustees, and the purchase prices and all material terms of the purchase of hotels from related parties are approved by the Acquisition Committee.

88

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 7 – COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS (CONTINUED)

Hotel Supplies

For the years ended December 31, 2013, 2012, and 2011, we incurred charges for hotel supplies of $222,  $149, and $143 respectively. For the years ended December 31, 2013, 2012, and 2011, we incurred charges for capital expenditure purchases of $19,783,  $11,809, and $18,404 respectively. These purchases were made from Hersha Purchasing and Design, a hotel supply company owned, in part, by certain executives and trustees of the Company. Hotel supplies are expensed and included in Hotel Operating Expenses on our consolidated statements of operations, and capital expenditure purchases are included in investment in hotel properties on our consolidated balance sheets. Approximately $2 and $5 is included in accounts payable at December 31, 2013 and December 31, 2012, respectively.

Due From Related Parties

The due from related parties balance as of December 31, 2013 and December 31, 2012 was approximately $11,124 and $8,488, respectively. The balances primarily consisted of working capital deposits made to Hersha affiliates.

Due to Related Parties

The balance due to related parties as of December 31, 2013 and December 31, 2012 was approximately $4,815 and $4,403, respectively. The balances consisted of amounts payable to HHMLP for administrative, management, and benefit related fees.

Hotel Ground Rent

For the years ended December 31, 2013, 2012, and 2011 we incurred $985, $835, and $877 respectively, of rent expense payable pursuant to ground leases related to certain hotel properties.

Future minimum lease payments (without reflecting future applicable Consumer Price Index increases) under these agreements are as follows:

Year Ending December 31,		Amount
2014	$	735
2015		735
2016		735
2017		735
2018		735
Thereafter		60,930
	$	64,605

Litigation

We are not presently subject to any material litigation nor, to our knowledge, is any other litigation threatened against us, other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.

89

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 8 –FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

Fair Value Measurements

Our determination of fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, we utilize a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

As of December 31, 2013, the Company’s derivative instruments represented the only financial instruments measured at fair value. Currently, the Company uses derivative instruments, such as interest rate swapsand caps,to manage its interest raterisk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and the counterparties. However, as of December 31, 2013 we have assessed the significance of the effect of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

90

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 8 – FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (CONTINUED)

Derivative Instruments

								Estimated Fair Value
Hedged Debt	Type	Strike Rate	Index	Effective Date	Maturity Date		Notional Amount		December 31, 2013		December 31, 2012
Holiday Inn Express Times Square, New York, NY*	Swap	1.240%	1-Month LIBOR + 4.00%	May 31, 2011	June 1, 2014	$	-	$	-	$	(530)
Courtyard, LA Westside, Culver City, LA	Swap	1.097%	1-Month LIBOR + 3.85%	September 29, 2011	September 29, 2015		30,000		(374)		(559)
Capitol Hill Hotel, Washington, DC	Swap	0.540%	1-Month LIBOR + 3.25%	February 1, 2012	February 1, 2015		27,119		(88)		(143)
Hotel 373, New York, NY	Cap	2.000%	1-Month LIBOR + 3.85%	May 24, 2012	June 1, 2015		18,477		1		6
Courtyard, Miami, FL	Swap	0.820%	1-Month LIBOR + 3.50%	July 2, 2012	July 1, 2016		60,000		(354)		(658)
Subordinated Notes Payable	Cap	2.000%	1-Month LIBOR + 3.00%	July 30, 2012	July 30, 2014		51,548		-		-
Unsecured Term Loan	Swap	0.545%	1-Month LIBOR + 2.40%	November 5, 2012	November 5, 2016		100,000		430		(135)
Unsecured Term Loan	Swap	0.600%	1-Month LIBOR + 2.40%	December 18, 2012	November 5, 2016		50,000		137		(167)
Hyatt, Union Square, New York, NY	Cap	2.000%	1-Month LIBOR + 4.19%	April 9, 2013	April 9, 2016		55,000		76		-
								$	(172)	$	(2,186)

*On January 3, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY and paid $565 to settle its obligation under the swap. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012.

On April 9, 2013, we entered into an interest rate cap that effectively fixes interest payment when 1 month-U.S. dollar LIBOR exceeds 2.00% on a variable rate mortgage on Hyatt Union Square, New York, NY. The notional amount of the interest rate cap is $55,000 and equals the principal of the variable rate mortgage being hedged. This interest rate cap matures on April 9, 2016. Please see “Note 2-Investments in Hotel Properties” for more information.

The fair value of certain swaps and our interest rate caps is included in other assets at December 31, 2013 and December 31, 2012 and the fair value of certain of our interest rate swaps is included in accounts payable, accrued expenses and other liabilities at December 31, 2013 and December 31, 2012.

The net change in fair value of derivative instruments designated as cash flow hedges was a gain of $1,410 and a loss of $635, and a loss of $813 for theyears ended December 31, 2013, 2012, and 2011, respectively. These unrealized gains and losses were reflected on our consolidated balance sheet in accumulated other comprehensive income.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate derivative. The change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1,284  of net unrealized gains/losses from accumulated other comprehensive income as an increase to interest expense during 2013. During 2014, the Company estimates that an additional $1,227 will be reclassified as an increase to interest expense.

Fair Value of Debt

The Company estimates the fair value of its fixed rate debt and the credit spreads over variable market rates on its variable rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of the debt obligation with similar credit policies. Credit spreads take into consideration general market conditions and maturity. The inputs utilized in estimating the fair value of debt are classified in Level 2 of the fair value hierarchy.  As of December 31, 2013, the carrying value and estimated fair value of the Company’s debt were $819,336 and $828,974, respectively.  As of December 31, 2012, the carrying value and estimated fair value of the Company’s debt were $792,708 and $814,451, respectively.

91

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 8 – FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (CONTINUED)

Impaired Hotel Property

As discussed in “Note 12-Discontinued Operations,” the Company recorded an impairment loss for the year ended December 31, 2013 of approximately $3,723 for the Holiday Inn Express Camp Springs, MD for which the anticipated net proceeds from the sale of the hotel did not exceed the carrying value.  The fair value of the hotel was estimated using level 2 inputs.

As discussed in “Note 12-Discontinued Operations,” the Company recorded an impairment loss for the year ended December 31, 2013 of approximately $6,591 for the non-core hotel portfolio the Company is under contract to sell for which the anticipated net proceeds did not exceed the carrying value.  The fair value of the non-core hotel portfolio was estimated using level 2 inputs.

92

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 9 – SHARE BASED PAYMENTS

In May 2011, the Company established and our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan (the “2012 Plan”) for the purpose of attracting and retaining executive officers, employees, trustees and other persons and entities that provide services to the Company.

Executives & Employees

Annual Long Term Equity Incentive Programs

To further align the interests of the Company’s executives with those of shareholders, the Compensation Committee grants annual long term equity incentive awards that are both “performance based” and “time based.”

On April 15, 2013, the Compensation Committee adopted the 2013 Annual LTIP for the executive officers, pursuant to which the executive officers are eligible to earn equity awards in the form of stock awards or performance share awards issuable pursuant to the 2012 Plan. Shares are earned under the 2013 Annual LTIP based on achieving a threshold, target or maximum level of performance and market based defined areas. The Company accounts for these grants as performance awards for which the Company assesses the probable achievement of the performance conditions at the end of the period. Stock based compensation of $1,144, was recorded for the year ended December 31, 2013 for the 2013 Annual LTIP and is included in general and administrative expense in the consolidated statements of operations. As of December 31, 2013, no common shares have been issued pursuant to the 2012 Plan to the executive officers in settlement of 2013 Annual LTIP awards.

Stock based compensation expense related to the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP of $2,618,  $3,925, and $2,179 was incurred during the years ended December 31, 2013, 2012, and 2011, respectively.  Unearned compensation related to the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP as of December 31, 2013 and December 31, 2012 was $1,305and$1,072, respectively. The following table is a summary of all unvested share awards issued to executives under the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP:

						Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
March 20, 2013
(2012 Annual LTIP)	779,045	$	5.95	3 years	25%/year (1)	389,520	-	$	1,039	$	-
March 26, 2012
(2011 Annual LTIP)	748,927	$	5.45	3 years	25%/year (1)	561,694	374,462		266		892
March 30, 2011
(2010 Annual LTIP)	440,669	$	5.98	3 years	25%/year (1)	440,669	330,500		-		180
						1,391,883	704,962	$	1,305	$	1,072

(1)25% of the issued shares vested immediately upon issuance.  In general, the remaining shares vest 25% on the first through third anniversaries of the date of issuance (subject to continuous employment through the applicable vesting date).

Multi-Year LTIP

On May 7, 2010, the Compensation Committee adopted the 2010 Multi-Year LTIP.  This program had a three-year performance period, which commenced on January 1, 2010 and ended on December 31, 2012.  The common shares issuable under this program were based upon the Company’s achievement of a certain level of (1) absolute total shareholder return (75% of the award), and (2) relative total shareholder return as compared to the Company’s peer group (25% of the award).  The Compensation Committee of the Board of Trustees concluded that the performance criteria for this program had been met and 3,051,862 common shares were issued under this program during the year ended December 31, 2013, of which 1,525,931 vested immediately, and the remaining vested on December 31, 2013.    

93

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)

On April 15, 2013, the Compensation Committee approved the 2013 Multi-Year LTIP.  The common shares issuable under this program are based on the Company’s achievement of a certain level of (1) absolute total shareholder return (50% of the award),

(2) relative total shareholder return as compared to the Company’s peer group (25% of the award), and (3) relative growth in revenue per available room compared to the Company’s peer group (25% of the award).  This program has a three-year performance period which commenced on January 1, 2013 and ends December 31, 2015. As of December 31, 2013, no common shares have been issued pursuant to the 2013 Plan to the executive officers in settlement of the 2013 Multi-Year LTIP awards. The Company accounts for the total shareholder return components of these grants as market based awards where the Company estimates unearned compensation at the grant date fair value which is then amortized into compensation cost over the vesting period of each individual plan. The Company accounts for the RevPAR component of the grants as performance-based awards for which the Company assesses the probability of achievement of the performance condition at the end of each period.

Stock based compensation expense of $3,481,  $3,192 and $3,192 was recorded for the years ended December 31, 2013, 2012, and 2011, respectively, for the Multi-Year LTIPs.  Unearned compensation related to the multi-year program as of December 31, 2013 and December 31, 2012, respectively, was $1,157 and $3,192.

Restricted Share Awards

In addition to stock based compensation expense related to awards under the Multi-Year LTIPs and Annual LTIPs, stock based compensation expense related to restricted common shares issued to executives and employees of the Company of  $1,618,  $1,911, and $1,662 was incurred during the years ended December 31, 2013, 2012, and 2011 respectively.  Unearned compensation related to the restricted share awards as of December 31, 2013 and December 31, 2012 was $4,102 and  $5,420, respectively.  The following table is a summary of all unvested share awards issued to executives under the 2012 Plan and prior to equity incentive plans:

						Shares Vested			Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
June 1, 2009	744,128	$	2.80	4 years	25%/year	744,128	558,305	$	-	$	217
June 1, 2010	182,308		4.63	2-3 years	25-50%/year	182,308	139,522		-		82
June 30, 2011	17,692		5.57	2-4 years	25-50%/year	9,919	4,958		28		51
April 18, 2012	1,035,595		5.47	5 years	33% Year 3, 4, 5 (1)	-	-		3,746		4,842
June 29, 2012	52,703		5.28	2-4 years	25-50%/year	22,480	-		110		228
June 28, 2013	48,600		5.64	2-4 years	25-50%/year	-	-		199		-
September 20, 2013	4,605		5.52	2-4 years	25-50%/year	-	-		19		-
Total	2,085,631					958,835	702,785	$	4,102	$	5,420

(1)On April 18, 2012, the Company entered into amended and restated employment agreements with the Company’s executive officers.  To induce the executives to agree to the substantial reduction in benefits upon certain terminations following a change of control as described in the agreements, the Company awarded an aggregate of 1,035,595 restricted common shares to the executives pursuant to the 2012 Plan.  None of these restricted common shares will vest prior to the third anniversary of the date of issuance.  Thereafter, 33.3% of each award of restricted common shares will vest on each of the third, fourth and fifth anniversaries of the date of issuance.  Vesting will accelerate upon a change of control or if the relevant executive’s employment with the Company were to terminate for any reason other than for cause (as defined in the agreements).

Trustees

Annual Retainer

The Compensation Committee approved a program that allows the Company’s trustees to make a voluntary election to receive any portion of the annual cash retainer in the form of common equity valued at a 25% premium to the cash that would have been received.  On December 27, 2013, we issued 39,133 shares which do not fully vest until December 31,2014.  Compensation expense incurred for the years ended December 31, 2013, 2012, and 2011,  respectively, was $160,  $66, and $111,which was offset by forfeitures as of December 31, 2012 and 2011, respectively, of $40 and $33.

94

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)

The following table is a summary of all unvested share awards issued to trustees in lieu of annual cash retainer:

						Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule		December 31, 2013		December 31, 2012
December 27, 2013	39,133	$	5.63	1 year	100%	$	220	$	-
December 28, 2012	32,417		4.93	1 year	100%		-		160
Total	71,550					$	220	$	160

Multi-Year Long-Term Equity Incentives

Compensation expense for the multi-year long term incentive plans for the Company’s trustees incurred for the years ended December 31, 2013, 2012, and 2011, respectively, was $55,  $43, and $21.  Unearned compensation related to the multi-year long term equity incentives was $124  and $113 as of December 31, 2013 and December 31, 2012, respectively.

 The following table is a summary of all unvested share awards issued to trustees under the 2012 Plan and prior to equity incentive plans:

				Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
December 27, 2013	12,000	3 years	33%/year	-	-	$	67	$	-
December 28, 2012	12,000	3 years	33%/year	4,002	-		39		59
June 5, 2012	10,800	3 years	33%/year	7,200	3,600		18		36
March 30, 2011	10,800	3 years	33%/year	10,800	7,800		-		18
				22,002	11,400	$	124	$	113

Share Awards

Compensation expense related to share awards issued to the Board of Trustees of $496,  $402 and $322 was incurred during the years ended December 31, 2013, 2012, and 2011, respectively and is recorded in general and administrative expense on the statement of operations. Share awards issued to the Board of Trustees are immediately vested. On June 3, 2013 an aggregate 54,422 shares were issued to the Board of Trustees at a price per share on the date of grant of $5.78.  On December 27, 2013, an aggregate32,400 shares were issued to the Board of Trustees at a price per share on the date of grant of $5.63.

Non-employees

The Company issues share based awards as compensation to non-employees for services provided to the Company consisting primarily of restricted common shares.  The Company recorded stock based compensation expense of $174,  $139, and $103 for the years ended December 31, 2013, 2012, and 2011, respectively.  Unearned compensation related to the restricted share awards as of December 31, 2013 and December 31, 2012 was $81 and$74, respectively. The following table is a summary of all unvested share awards issued to non-employees under the Company’s 2008 Equity Incentive Plan and the 2012 Plan:

						Shares Vested			Unearned Compensation
	Shares		Share Price on	Vesting	Vesting	December 31,	December 31,		December 31,		December 31,
Original Issuance Date	Issued		date of grant	Period	Schedule	2013	2012		2013		2012
February 1, 2013	30,000	$	5.41	2 years	50%/year	14,999	-	$	81	$	-
March 26, 2012	28,500	$	5.45	2 years	50%/year	28,500	15,000		-		74
Total	58,500					43,499	15,000	$	81	$	74

95

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 10 – EARNINGS PER SHARE

The following table is a reconciliation of the income or loss (numerator) and the weighted average shares (denominator) used in the calculation of basic and diluted earnings per common share. The computation of basic and diluted earnings per share is presented below.

	Year Ended December 31,
		2013		2012			2011
NUMERATOR:
Basic and Diluted*
Income from Continuing Operations	$	20,753	$	7,498		$	100
Income from Continuing Operations allocated to Noncontrolling Interests		658		703			658
Distributions to Preferred Shareholders		(14,611)		(14,000)			(10,499)
Dividends Paid on Unvested Restricted Shares		(804)		(459)			(229)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Stock		(2,250)		-			-
Income (Loss) from Continuing Operations attributable to Common Shareholders		3,746		(6,258)			(9,970)
Discontinued Operations
Income (Loss) from Discontinued Operations		29,195		14,720			(27,068)
(Income) Loss from Discontinued Operations allocated to Noncontrolling Interests		(993)		(545)			1,076
Income (Loss) from Discontinued Operations attributable to Common Shareholders		28,202		14,175			(25,992)
Net Income (Loss) attributable to Common Shareholders	$	31,948	$	7,917		$	(35,962)
DENOMINATOR:
Weighted average number of common shares - basic		198,390,450		187,415,270			168,753,382
Effect of dilutive securities:
Restricted Stock Awards		2,384,165		-	*		-
Contingently Issued Shares		1,143,562		-	*		-
Weighted average number of common shares - diluted		201,918,177		187,415,270			168,753,382

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

96

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 10 – EARNINGS PER SHARE (CONTINUED)

The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:

	Year Ended December 31,
	2013	2012	2011
Common Units of Limited Partnership Interest	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding	-	433,097	584,216
Contingently Issuable Share Awards	-	2,778,545	2,097,456
Options to Acquire Common Shares Outstanding	-	275,580	2,360,156
Total potentially dilutive securities excluded from the denominator	6,968,035	10,695,345	12,336,940

97

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 11 – CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES

Interest paid during 2013, 2012, and 2011 totaled $42,984, $41,744, and $42,726 respectively. The following non-cash investing and financing activities occurred during 2013, 2012 and 2011:

	2013		2012		2011
Common Shares issued as part of the Dividend Reinvestment Plan	$	38	$	24	$	14
Acquisition of hotel properties and consolidation of variable interest entities:
Issuance of Common Units		-		-		204
Debt assumed, net of discount		-		85,913		62,552
Development loan accrued interest revenue receivable paid in-kind by adding balance to development loan principal		-		678		2,094
Settlement of development loan receivable principal and accrued interest revenue receivable		13,303		-		8,300
Disposition of hotel properties
Investment in hotel properties, net, conveyed to mortgage lender		-		1,938		-
Debt conveyed to mortgage lender		-		2,940		-
Debt assumed by purchaser		-		54,217		-
Conversion of Common Units to Common Shares		106		572		639
Reallocation of noncontrolling interest		-		(966)		3,835

98

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 12 – DISCONTINUED OPERATIONS

The operating results of certain real estate assets which have been sold or otherwise qualify as held for sale are included in discontinued operations in the statements of operations for all periods presented.

Assets Held for Sale

Assets held for sale or liabilities related to assets held for sale consisted of the following as of December 31, 2013:

	December 31, 2013
Land	$	9,517
Buildings and Improvements		58,129
Furniture, Fixtures and Equipment		9,198
		76,844
Less Accumulated Depreciation & Amortization		(20,261)
Assets Held for Sale	$	56,583
Liabilities Related to Assets Held for Sale	$	45,835

The following table sets forth the components of discontinued operations for the years ended December 31, 2013, 2012, and 2011:

	Year Ended December 31,
		2013		2012		2011
Revenue:
Hotel Operating Revenues	$	58,045	$	63,465	$	96,901
Other Revenue		-		11		55
Total Revenues		58,045		63,476		96,956
Expenses:
Hotel Operating Expenses		35,158		39,046		60,288
Hotel Ground Rent		-		72		433
Real Estate and Personal Property Taxes and Property Insurance		3,316		3,636		5,460
General and Administrative		36		27		597
Acquisition and Termination Transaction Costs		-		8		(17)
Depreciation and Amortization		7,050		9,148		15,142
Interest Expense		4,863		7,872		12,817
Other Expense		44		10		4
Loss on Debt Extinguishment		-		168		43
Income Tax Expense		190		-		-
Total Expenses		50,657		59,987		94,767
Income from Discontinued Operations	$	7,388	$	3,489	$	2,189

We allocate to income or loss from discontinued operations interest expense related to debt that is to be assumed or that is required to be repaid as a result of the disposal transaction.

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

Disposed Assets

Hotel	Acquisition Date	Disposition Date		Consideration		Gain on Disposition
Non-Core Portfolio II (12)	January 1999 - July 2010	December 2013	$	158,600	$	31,559	(1)
Holiday Inn Express, Camp Springs, MD	June 2008	September 2013		8,500		120
Comfort Inn, Harrisburg, PA	January 1999	June 2013		3,700		442
2013 Total						32,121
Non-Core Hotel Portfolio (18)	January 1999 - July 2007	February 2012 & May 2012	$	155,000	$	4,978	(2)
Land Parcel, Eighth Ave, Manhattan, NY	June 2006	April 2012		19,250		5,037
Comfort Inn, North Dartmouth, MA	May 2006	March 2012		-		1,216	(3)
2012 Total					$	11,231
Comfort Inn, West Hanover, PA	May 1998	July 2011	$	5,250	$	949
Land Parcel,  Nevins Street, Brooklyn, NY	June 2007	December 2011		4,500		42
2011 Total					$	991

(1) In September 2013, our Board of Trustees authorized management of the Company to sell this portfolio. On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties, for an aggregate purchase price of approximately $217,000.  The 16 non-core hotel properties in the portfolio were acquired by the Company between 1999 and 2010. We recorded an impairment loss of approximately $6,591 for those assets for which the anticipated net proceeds do not exceed the carrying value.

On December 20, 2013, the Company closed on the sale of 12 of these non-core hotel properties.  As a result of entering into these purchase and sale agreements for the 16 non-core assets mentioned above, the operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2013, 2012, and 2011.  The 12 assets were sold for a total sales price of $158,600, reduced the Company’s consolidated mortgage debt by $33,044 and generated a gain on sale of approximately $31,559.   In February 2014, the remaining 4 assets were sold for a total sales price of $58,400 and reduced the Company’s consolidated mortgage debt by $45,710.

(2) In May 2011, our Board of Trustees authorized management of the Company to sell this portfolio.  On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture, for an aggregate purchase price of approximately $155,000.  The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006.  As a result of entering into these purchase and sale agreements for the 18 non-core assets mentioned above, we recorded an impairment loss in 2011 of approximately $30,248 for those consolidated assets for which the anticipated net proceeds did not exceed the carrying value.

On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three hotel properties owned in part by the Company through an unconsolidated joint venture, and closed on the remaining 4 properties, on May 8, 2012, including one hotel property owned in part by the Company through an unconsolidated joint venture.  The operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2012 and 2011.  The 18 assets were sold for a total sales price of $155,000, reduced the Company’s consolidated mortgage debt by $61,298 and generated a gain on sale of approximately $4,910.   

100

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

(3) On March 30, 2012, we transferred the title to the Comfort Inn, located in North Dartmouth, to the lender.  Previously, we had ceased operations at this property on March 31, 2011.  The operating results were reclassified to discontinued operations in the statements of operations for the years ended December 31, 2012 and 2011.  The transfer of the title resulted in a gain of approximately $1,216, since the outstanding mortgage loan payable exceeded the net book value of the property.

101

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 13 – SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS IN PARTNERSHIP

Common Shares

The Company’s outstanding common shares have been duly authorized, and are fully paid and non-assessable. Common shareholders are entitled to receive dividends if and when authorized and declared by the Board of Trustees of the Company out of assets legally available and to share ratably in the assets of the Company legally available for distribution to its shareholders in the event of its liquidation, dissolution or winding up after payment of, or adequate provision for, all known debts and liabilities of the Company.

Preferred Shares

The Declaration of Trust authorizes our Board of Trustees to classify any unissued preferred shares and to reclassify any previously classified but unissued preferred shares of any series from time to time in one or more series, as authorized by the Board of Trustees. Prior to issuance of shares of each series, the Board of Trustees is required by Maryland REIT Law and our Declaration of Trust to set for each such series, subject to the provisions of our Declaration of Trust regarding the restriction on transfer of shares of beneficial interest, the terms, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such series. Thus, our Board of Trustees could authorize the issuance of additional preferred shares with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control in us that might involve a premium price for holders of common shares or otherwise be in their best interest.

Common Units

Common Units are issued in connection with the acquisition of wholly owned hotels and joint venture interests in hotel properties. The total number of Common Units outstanding as of December 31, 2013, 2012 and 2011 was 6,914,716,  7,112,506 and 7,270,316, respectively. These units can be redeemed for cash or converted to common shares, at the Company’s option, on a one-for-one basis. The number of common shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidation or similar pro rata share transactions, that otherwise would have the effect of diluting the ownership interest of the limited partners or our shareholders. During 2013, 2012 and 2011, 27,790,  157,810 and 195,000 Common Units were converted to common shares, respectively. The Company redeemed 170,000 Common Units as part of the acquisition of the Hyatt Union Square, New York, NY during 2013.

102

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 14 – INCOME TAXES

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 1999. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income to its shareholders. It is the Company’s current intention to adhere to these requirements and maintain the Company’s qualification for taxation as a REIT. As a REIT, the Company generally will not be subject to federal corporate income tax on that portion of its net income that is currently distributed to shareholders. If the Company fails to qualify for taxation as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.

Taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. 44 New England is subject to income taxes at the applicable federal, state and local tax rates.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income from continuing operations as a result of the following differences:

		For the year ended December 31,
		2013		2012		2011
Statutory federal income tax provision	$	5,152	$	1,409	$	34
Adjustment for nontaxable loss		(7,472)		(623)		(6,170)
State income taxes, net of federal income tax effect		(1,317)		151		(1,146)
Recognition of deferred tax assets		(1,963)		-		-
Changes in valuation allowance		-		(4,292)		7,282
Total income tax benefit	$	(5,600)	$	(3,355)	$	-

The components of the Company’s income tax expense (benefit) from continuing operations for the years ended December 31, 2013, 2012 and 2011 were as follows:

		For the year ended December 31,
		2013		2012		2011
Income tax expense (benefit):
Current:
Federal	$	-	$	-	$	-
State		-		229		-
Deferred:
Federal		(3,604)		(3,584)		-
State		(1,996)		-		-
Total	$	(5,600)	$	(3,355)	$	-
Income tax expense (benefit):
From continuing operations		(5,600)		(3,355)		-
From discontinued operations		190		-		-
Total	$	(5,410)	$	(3,355)	$	-

103

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 14 – INCOME TAXES (CONTINUED)

The components of consolidated TRS’s net deferred tax asset as of December 31, 2013 and 2012 were as follows:

		As of December 31,
		2013		2012
Deferred tax assets:
Net operating loss carryforwards	$	8,605	$	4,234
Accrued expenses and other		685		(75)
Tax credit carryforwards		280		-
Net deferred tax assets		9,570		4,159
Valuation allowance		(804)		(804)
Deferred tax assets	$	8,766	$	3,355

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on limitations related to the utilization of certain tax attribute carryforwards, Management recorded a valuation allowance of approximately $804 as these attributes are not more likely than not to be realized prior to their expiration. Based on the level of historical taxable income, tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible, Management believes it is more likely than not that the remaining deferred tax assets will be realized.

As of December 31, 2013, we have gross federal net operating loss carryforwards of $21,798which expire over various periods from 2023 through 2033.As of December 31, 2013, we have gross state net operating loss carryforwards of $22,210 which expire over various periods from 2014 to 2033.  The Company has tax credits of $280 available which begin to expire in 2028. 

Earnings and profits, which will determine the taxability of distributions to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the estimated useful lives and methods used to compute depreciation. The following table sets forth certain per share information regarding the Company’s common and preferred share distributions for the years ended December 31, 2013, 2012 and 2011.

	2013	2012	2011
Preferred Shares - 8% Series A
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 8% Series B
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 6.875% Series C
Ordinary income	100.00%	N/A	N/A
Return of Capital	0.00%	N/A	N/A
Capital Gain Distribution	0.00%	N/A	N/A
Common Shares - Class A
Ordinary income	45.15%	1.28%	73.30%
Return of Capital	54.85%	98.72%	26.70%
Capital Gain Distribution	0.00%	0.00%	0.00%

104

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

NOTE 15 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	Year Ended December 31, 2013
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	65,878	$	91,068	$	90,741	$	92,510
Total Expenses		73,174		71,703		87,512		90,820
(Loss) Income from Unconsolidated Joint Ventures		(396)		148		227		(1,814)
(Loss) Income from Continuing Operations		(7,692)		19,513		3,456		(124)
Income Tax Benefit		1,129		(1,222)		2,375		3,318
Income (Loss) from Discontinued Operations (including Gain on Disposition of Hotel Properties)		(1,113)		(206)		(3,532)		34,046
Net (Loss) Income		(7,676)		18,085		2,299		37,240
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(673)		210		(164)		962
Issuance Costs of Redeemed Preferred Stock		2,250		-		-		-
Preferred Distributions		3,844		3,589		3,589		3,589
Net (Loss) Income applicable to Common Shareholders	$	(13,097)	$	14,286	$	(1,126)	$	32,689
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.07)	$	0.08	$	0.01	$	0.00
Discontinued Operations		-		(0.01)		(0.02)		0.16
Net (Loss) Income applicable to Common Shareholders	$	(0.07)	$	0.07	$	(0.01)	$	0.16
Weighted Average Common Shares Outstanding
Basic		197,029,017		198,633,051		198,878,496		198,994,277
Diluted		197,029,017		201,201,337		201,644,633		198,994,277
	Year Ended December 31, 2012
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	56,069	$	81,361	$	82,355	$	82,741
Total Expenses		65,623		73,097		77,480		80,059
(Loss) Income from Unconsolidated Joint Ventures		(730)		190		(1,431)		(153)
(Loss) Income from Continuing Operations		(10,284)		8,454		3,444		2,529
Income Tax Benefit		-		-		-		3,355
(Loss) Income from Discontinued Operations (including Gain on Disposition of Hotel Properties)		2,370		8,935		2,450		965
Net (Loss) Income		(7,914)		17,389		5,894		6,849
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(741)		796		(279)		66
Preferred Distributions		3,500		3,500		3,500		3,500
Net (Loss) Income applicable to Common Shareholders	$	(10,673)	$	13,093	$	2,673	$	3,283
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.09)	$	0.03	$	0.00	$	0.01
Discontinued Operations		0.03		0.04		0.01		0.01
Net Loss (Income) applicable to Common Shareholders	$	(0.06)	$	0.07	$	0.01	$	0.02
Weighted Average Common Shares Outstanding
Basic		170,427,428		186,264,437		196,360,325		196,411,729
Diluted		170,427,428		189,011,990		196,360,325		199,593,648

In the second quarter of 2012, we recorded an adjustment impacting gain on disposition of hotel properties that increased net income by $1,950. This adjustment was made after completing an analysis that determined a liability for deferred land rent payable was not properly written off when a hotel property was sold during the first quarter of 2012. After evaluating the quantitative and qualitative effects of this adjustment, we have concluded that the impact on the Company’s first quarter and second quarter consolidated financial statements was not material.

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2013

[IN THOUSANDS]

		Initial Costs		Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period			Accumulated Depreciation	Net Book Value
Description	Encumbrances	Land	Buildings &     Improvements	Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total	Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Residence Inn, Framingham, MA	-	1,325	12,737	-	1,924	1,325	14,661	15,986	($3,923)	12,063	03/26/04
Hampton Inn, New York, NY	(23,650)	5,472	23,280	-	1,440	5,472	24,720	30,192	(5,927)	24,265	04/01/05
Residence Inn, Greenbelt, MD	(10,491)	2,615	14,815	-	2,233	2,615	17,048	19,663	(4,351)	15,312	07/16/04
Courtyard, Brookline, MA	(37,065)	-	47,414	-	1,435	-	48,849	48,849	(11,045)	37,804	06/16/05
Residence Inn, Tyson's Corner, VA	-	4,283	14,475	-	1,860	4,283	16,335	20,618	(3,498)	17,120	02/02/06
Hilton Garden Inn, JFK Airport, NY	(20,016)	-	25,018	-	2,466	-	27,484	27,484	(5,801)	21,683	02/16/06
Hawthorne Suites, Franklin, MA	(7,697)	1,872	8,968	-	364	1,872	9,332	11,204	(1,922)	9,282	04/25/06
Holiday Inn Exp, Cambridge, MA	-	1,956	9,793	-	2,338	1,956	12,131	14,087	(2,926)	11,161	05/03/06
Residence Inn, Norwood, MA	-	1,970	11,761	-	1,470	1,970	13,231	15,201	(2,418)	12,783	07/27/06
Hampton Inn, Chelsea, NY	(34,204)	8,905	33,500	-	1,856	8,905	35,356	44,261	(7,131)	37,130	09/29/06
Hyatt House, Gaithersburg, MD	(13,720)	2,912	16,001	-	3,372	2,912	19,373	22,285	(3,742)	18,543	12/28/06
Hyatt House, Pleasant Hills, CA	(20,160)	6,216	17,229	-	2,953	6,216	20,182	26,398	(3,356)	23,042	12/28/06
Hyatt House, Pleasanton, CA	(14,490)	3,941	12,560	-	3,441	3,941	16,001	19,942	(3,024)	16,918	12/28/06
Hyatt House, Scottsdale, AZ	(16,778)	3,060	19,968	-	3,350	3,060	23,318	26,378	(4,610)	21,768	12/28/06
Hyatt House, White Plains, NY	(33,030)	8,823	30,273	-	2,537	8,823	32,810	41,633	(6,383)	35,250	12/28/06
Holiday Inn Exp & Suites, Chester, NY	(6,366)	1,500	6,671	-	219	1,500	6,890	8,390	(1,208)	7,182	01/25/07
Hampton Inn, Seaport, NY	(18,047)	7,816	19,040	-	692	7,816	19,732	27,548	(3,472)	24,076	02/01/07
Hotel 373-5th Ave, New York, NY	(18,477)	14,239	16,778	-	129	14,239	16,907	31,146	(2,816)	28,330	06/01/07
Sheraton Hotel, JFK Airport, NY	-	-	27,315	-	969	-	28,284	28,284	(4,048)	24,236	06/13/08
Hampton Inn, Philadelphia, PA	-	3,490	24,382	-	5,901	3,490	30,283	33,773	(9,468)	24,305	02/15/06
Duane Street, Tribeca, NY	(14,597)	8,213	12,869	-	1,238	8,213	14,107	22,320	(2,411)	19,909	01/04/08
NU Hotel, Brooklyn, NY	-	-	22,042	-	638	-	22,680	22,680	(3,212)	19,468	01/14/08

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2013

[IN THOUSANDS] (CONTINUED)

			Initial Costs			Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period				Accumulated Depreciation	Net Book Value
Description		Encumbrances	Land	Buildings &     Improvements		Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total		Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Hilton Garden Inn, Tribeca, NY		(31,317)	21,077	42,955		-	278	21,077	43,233	64,310		(5,091)	59,219	05/01/09
Hampton Inn, Times Square, NY		-	10,691	41,637		-	275	10,691	41,912	52,603		(4,079)	48,524	02/09/10
Holiday Inn Express, Times Square, NY		-	11,075	43,113		-	46	11,075	43,159	54,234		(4,204)	50,030	02/09/10
Candlewood Suites, Times Square, NY		-	10,281	36,687		-	41	10,281	36,728	47,009		(3,569)	43,440	02/09/10
Hyatt Place, KOP, PA		-	1,133	7,267		-	3,908	1,133	11,175	12,308		(3,791)	8,517	08/17/10
Holiday Inn Express, Wall Street, NY		-	12,152	21,100		-	186	12,152	21,286	33,438		(1,959)	31,479	05/07/10
Hampton Inn, Washington, DC		-	9,335	58,048		-	1,102	9,335	59,150	68,485		(5,031)	63,454	09/01/10
Courtyard, Alexandria, VA		(23,755)	6,376	26,089		-	2,465	6,376	28,554	34,930		(5,700)	29,230	09/29/06
Sheraton, Wilmington South, DE		-	1,765	16,929		-	1,068	1,765	17,997	19,762		(1,932)	17,830	12/21/10
Holiday Inn, Water Street, NY		-	7,341	28,591		-	217	7,341	28,808	36,149		(1,814)	34,335	03/25/11
Capital Hill Suites Washington, DC		(27,119)	8,095	35,141		-	2,801	8,095	37,942	46,037		(2,955)	43,082	04/15/11
Courtyard, LA Westside, CA		(30,000)	13,489	27,025		-	1,795	13,489	28,820	42,309		(1,884)	40,425	05/19/11
Courtyard, Miami, FL		(60,000)	35,699	55,805		1	51	35,700	55,856	91,556		(2,971)	88,585	11/16/11
The Rittenhouse Hotel, PA		-	7,108	29,556		-	7,486	7,108	37,042	44,150		(2,513)	41,637	03/01/12
The Boxer, Boston, MA		-	1,456	14,954		-	1,419	1,456	16,373	17,829		(759)	17,070	05/07/12
Holiday Inn Express, Manhattan, NY		-	30,329	57,016		-	713	30,329	57,729	88,058		(2,276)	85,782	06/18/12
Hyatt, Union Square, NY		(55,000)	32,940	79,300		-	177	32,940	79,477	112,417		(1,445)	110,972	04/09/13
Courtyard, San Diego, CA		-	15,656	51,674		-	40	15,656	51,715	67,371		(754)	66,617	05/30/13
Residence Inn, Coconut Grove, FL		-	4,146	17,456		-	9	4,146	17,466	21,612		(245)	21,367	06/12/13
Winter Haven Hotel, Miami Beach, FL		-	5,400	18,147		-	-	5,400	18,148	23,548		15	23,563	12/20/13
Blue Moon Hotel, Miami Beach, FL		-	4,874	20,354		-	-	4,874	20,355	25,229		17	25,246	12/20/13
Total Investment in Real Estate	$	($515,979)	339,026	1,155,733	$	1	66,902	339,027	1,222,639	1,561,666	$	(149,632)	1,412,034

107

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2013

[IN THOUSANDS] (CONTINUED)

			Initial Costs			Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period				Accumulated Depreciation	Net Book Value
Assets Held For Sale
		Encumbrances	Land	Buildings &     Improvements		Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total		Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Holiday Inn Exp, Langhorne, PA		(5,881)	1,088	6,573		(111)	(353)	977	6,220	7,197		(1,519)	5,678	05/26/05
Holiday Inn Exp, King of Prussia, PA		(11,628)	2,557	13,339		-	1,738	2,557	15,077	17,634		(3,441)	14,193	05/23/05
Courtyard, Langhorne, PA		(13,834)	3,064	16,068		-	986	3,064	17,054	20,118		(3,632)	16,486	01/03/06
Hyatt House, Bridgewater, NJ		(14,492)	3,373	19,685		(454)	92	2,919	19,778	22,697		(3,965)	18,732	12/28/06
Total Assets Held For Sale	$	(45,835)	10,082	55,665	$	(565)	2,463	9,517	58,129	67,646	$	(12,557)	55,089
Total Real Estate	$	(561,814)	349,108	1,211,398	$	(564)	69,365	348,544	1,280,768	1,629,312	$	(162,189)	1,467,123

*Assets are depreciated over a 7 to 40 year life, upon which the latest income statement is computed

The aggregate cost of land, buildings and improvements for Federal income tax purposes for the years ended December 31, 2013, 2012 and 2011 is approximately $1,575,555,  $1,278,318, and $1,362,064 respectively.

Depreciation is computed for buildings and improvements using a useful life for these assets of 7 to 40 years.

See Accompanying Report of Independent Registered Public Accounting Firm

	2013		2012		2011
Reconciliation of Real Estate
Balance at beginning of year	$	1,520,151	$	1,481,433	$	1,291,213
Additions during the year		275,032		167,916		248,358
Dispositions/Deconsolidation of consolidated joint venture during the year		(156,504)		(127,992)		(29,216)
Changes/Impairments in Assets Held for Sale		(9,367)		(1,206)		(141,633)
Investment in Real Estate		1,629,312		1,520,151		1,368,722
Assets Held for Sale, net of impairment		-		-		112,711
Total Real Estate	$	1,629,312	$	1,520,151	$	1,481,433
Reconciliation of Accumulated Depreciation
Balance at beginning of year	$	150,353	$	139,057	$	112,161
Depreciation for year		39,771		35,597		28,229
Changes/Impairments in Assets Held for Sale		51		-		-
Accumulated depreciation on assets sold		(27,986)		(24,301)		(1,333)
Balance at the end of year	$	162,189	$	150,353	$	139,057

108

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A control system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined within Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the processes designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria contained in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission as of December 31, 2013. Based on that evaluation, management has concluded that, as of December 31, 2013, the Company’s internal control over financial reporting was effective based on those criteria. The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

109

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of

Hersha Hospitality Trust:

We have audited Hersha Hospitality Trust and subsidiaries’ internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Hersha Hospitality Trust's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Hersha Hospitality Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Hersha Hospitality Trust and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated February 26, 2014 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Philadelphia, Pennsylvania

February 26, 2014

110

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

111

PART III

Item 10. Trustees, Executive Officers and Corporate Governance

The required information is incorporated herein by reference from our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Annual Report on Form 10-K with respect to our 2014 Annual Meeting of Shareholders.

Item 11. Executive Compensation

The required information is incorporated herein by reference from our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Annual Report on Form 10-K with respect to our 2014 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain of the required information is incorporated herein by reference from our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Annual Report on Form 10-K with respect to our 2014 Annual Meeting of Shareholders.

SECURITIES ISSUABLE PURSUANT TO EQUITY COMPENSATION PLANS

As of December 31, 2013, no options or warrants to acquire our securities pursuant to equity compensation plans were outstanding. The following table sets forth the number of securities to be issued upon exercise of outstanding options, warrants and rights; weighted average exercise price of outstanding options, warrants and rights; and the number of securities remaining available for future issuance under our equity compensation plans as of December 31, 2013:

			(1)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans(1)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	-	-	1,430,038
Equity compensation plans not approved by security holders	-	-	-
Total	-	-	1,430,038

(1) Represents shares issuable under the Company’s 2012 Equity Incentive Plan. On January 1, 2012, the Company’s 2008 Equity Incentive Plan (“2008 EIP”) was terminated. Termination of the 2008 EIP does not impact awards issued under the 2008 EIP prior its termination.

Item 13. Certain Relationships and Related Transactions, and Trustee Independence

The required information is incorporated herein by reference from our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Annual Report on Form 10-K with respect to our 2014 Annual Meeting of Shareholders.

Item 14. Principal Accountant Fees and Services

The required information is incorporated herein by reference from our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Annual Report on Form 10-K with respect to our 2014 Annual Meeting of Shareholders.

112

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)Documents filed as part of this report.

1.Financial Statements:

The following financial statements are included in this report on pages 56 to 105:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2013 and 2012

Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011

Consolidated Statements of Equity and Comprehensive Income for the years ended December 31, 2013, 2012 and 2011

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011

Notes to Consolidated Financial Statements

2.Financial Statement Schedules:

The following financial statement schedule is included in this report on pages 106 to 108: Schedule III - Real Estate and Accumulated Depreciation for the year ended December 31, 2013

113

3.Exhibits

The following exhibits listed are filed as a part of this report:

Exhibit No.
3.1	Articles of Amendment and Restatement of the Declaration of Trust of Hersha Hospitality Trust, as amended and supplemented (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed by Hersha Hospitality Trust on May 2, 2013 and incorporated by reference herein).
3.2	Amended and Restated Bylaws of Hersha Hospitality Trust (filed as Exhibit 3.1 to the Current Report on Form 8-K, filed by Hersha Hospitality Trust on February 15, 2012 and incorporated by reference herein).
4.1	Form of Common Share Certificate.*
4.2	Junior Subordinated Indenture, dated as of May 13, 2005, between Hersha Hospitality Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (filed as Exhibit 4.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on May 17, 2005 and incorporated by reference herein).
4.3	Form of Junior Subordinated Note (included in Exhibit 4.2).
4.4	Amended and Restated Trust Agreement of Hersha Statutory Trust I, dated as of May 13, 2005, among Hersha Hospitality Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee, the Administrative Trustees named therein and the holders of undivided beneficial interests in the assets of Hersha Statutory Trust I (filed as Exhibit 4.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on May 17, 2005 and incorporated by reference herein).
4.5	Form of Trust Preferred Security Certificate (included in Exhibit 4.4).
4.6	Junior Subordinated Indenture, dated as of May 31, 2005, between Hersha Hospitality Limited Partnership and Wilmington Trust Company, as trustee (filed as Exhibit 4.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 6, 2005 and incorporated by reference herein).
4.7	Form of Junior Subordinated Note (included in Exhibit 4.6 hereto).
4.8	Amended and Restated Trust Agreement of Hersha Statutory Trust II, dated as of May 31, 2005, among Hersha Hospitality Limited Partnership, as depositor, Wilmington Trust Company, as property trustee and as Delaware trustee, the Administrative Trustees named therein and the holders of undivided beneficial interests in the assets of Hersha Statutory Trust II (filed as Exhibit 4.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 6, 2005 and incorporated by reference herein).
4.9	Form of Trust Preferred Security Certificate (included in Exhibit 4.8 hereto).
4.10	Investor Rights and Option Agreement, dated August 4, 2009, by and among Hersha Hospitality Trust, Real Estate Investment Group L.P. and IRSA Inversiones y Representaciones Sociedad Anónima (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on August 6, 2009 and incorporated by reference herein).†
4.11	Trustee Designation Agreement, dated August 4, 2009, by and among Hersha Hospitality Trust, Real Estate Investment Group L.P. and IRSA Inversiones y Representaciones Sociedad Anónima (filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on August 6, 2009 and incorporated by reference herein).†
4.12	Amended and Restated Registration Rights Agreement, dated June 30, 2010, by and among Hersha Hospitality Trust, Real Estate Investment Group L.P., IRSA Inversiones y Representaciones Sociedad Anónima, Dolphin Fund Ltd. and Citibank, N.A. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 30, 2010 and incorporated by reference herein).†
4.13	Form of specimen certificate representing the 6.875% Series C Cumulative Redeemable Preferred Shares, $0.01 par value per share (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A filed on March 1, 2013)
10.1	Amended and Restated Agreement of Limited Partnership of Hersha Hospitality Limited Partnership.*
10.2	Option Agreement, dated as of June 3, 1998, among Hasu P. Shah, Jay H. Shah, Neil H. Shah, Bharat C. Mehta, K.D. Patel, Rajendra O. Gandhi, Kiran P. Patel, David L. Desfor, Madhusudan I. Patni, Manhar Gandhi and Hersha Hospitality Limited Partnership.*†
10.3	Amendment to Option Agreement, dated December 4, 1998 (filed as Exhibit 10.19(a) to the Registration Statement on Form S-11/A filed by Hersha Hospitality Trust on December 7, 1998 and incorporated by reference herein).†
10.4	Administrative Services Agreement, dated January 26, 1999, between Hersha Hospitality Trust and Hersha Hospitality Management, L.P.*†

114

10.5	Second Amendment to the Amended and Restated Agreement of Limited Partnership of Hersha Hospitality Limited Partnership, dated as of April 21, 2003 (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on April 23, 2003 and incorporated by reference herein).
10.6	Second Amendment to Option Agreement (filed as Exhibit 10.15 to the Registration Statement on Form S-3 filed by Hersha Hospitality Trust on February 24, 2004 and incorporated by reference herein).
10.7	Membership Interests Contribution Agreement, dated June 15, 2005, by and among Waterford Hospitality Group, LLC, Mystic Hotel Investors, LLC and Hersha Hospitality Limited Partnership (Filed as Exhibit 10.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 21, 2005 and incorporated by reference herein).
10.8	Form of Limited Liability Company Agreement of Mystic Partners, LLC (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 21, 2005 and incorporated by reference herein).
10.9	Form of Management Agreement between the lessee entity and Waterford Hotel Group, Inc. (filed as Exhibit 10.3 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 21, 2005 and incorporated by reference herein).
10.10	Form of Limited Liability Company Agreement of Leaseco, LLC (filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on June 21, 2005 and incorporated by reference herein.
10.11	Third Amendment to Agreement of Limited Partnership of Hersha Hospitality Limited Partnership, dated August 5, 2005 (filed as Exhibit 10.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on August 8, 2005 and incorporated by reference herein).
10.12	Sixth Amendment to Membership Interests Contribution Agreement, dated February 8, 2006, by and among Hersha Hospitality Limited Partnership, Mystic Hotel Investors, LLC, Waterford Hospitality Group LLC and First American Title Insurance Company (filed as Exhibit 10.5 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on February 14, 2006 and incorporated by reference herein).
10.13	First Amendment to Limited Liability Company Operating Agreement of Mystic Partners Leaseco, LLC, dated February 8, 2006 (filed as Exhibit 10.7 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on February 14, 2006 and incorporated by reference herein).
10.14	Conditional Payment Guaranty, dated February 8, 2006, made by Hersha Hospitality Limited Partnership and Mystic Hotel Investors, LLC to and for the benefit of Merrill Lynch Capital (filed as Exhibit 10.8 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on February 14, 2006 and incorporated by reference herein).
10.15	Conditional Payment Guaranty, dated February 8, 2006, made by Hersha Hospitality Limited Partnership and Mystic Hotel Investors, LLC to and for the benefit of Merrill Lynch Capital (filed as Exhibit 10.9 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on February 14, 2006 and incorporated by reference herein).
10.16	Supplemental Limited Joinder, dated February 8, 2006, made by Hersha Hospitality Limited Partnership and Mystic Hotel Investors LLC (filed as Exhibit 10.10 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on February 14, 2006 and incorporated by reference herein).
10.17	Amended and Restated Employment Agreement, dated June 28, 2007, by and between the Company and Hasu P. Shah (filed as Exhibit 10.1 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on July 3, 2007 and incorporated by reference herein).†
10.18	Amended and Restated Employment Agreement, dated June 28, 2007, by and between the Company and Jay H. Shah (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on July 3, 2007 and incorporated by reference herein).†
10.19	Amended and Restated Employment Agreement, dated June 28, 2007, by and between the Company and Neil H. Shah (filed as Exhibit 10.3 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on July 3, 2007 and incorporated by reference herein).†
10.20	Amended and Restated Employment Agreement, dated June 28, 2007, by and between the Company and Ashish R. Parikh (filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on July 3, 2007 and incorporated by reference herein).†
10.21	Amended and Restated Employment Agreement, dated June 28, 2007, by and between the Company and Michael R. Gillespie (filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Hersha Hospitality Trust on July 3, 2007 and incorporated by reference herein).†
10.22	Hersha Hospitality Trust 2008 Equity Incentive Plan (filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A, filed by Hersha Hospitality Trust on April 18, 2008 and incorporated by reference herein).†
10.23	Form of Stock Award Agreement under the Hersha Hospitality Trust 2008 Equity Incentive Plan (filed as Exhibit 10.2 to the Current Report on Form 8-K filed on May 29, 2008 and incorporated by reference herein).†

115

10.24	Form of Performance Share Award Agreement under the Hersha Hospitality Trust 2008 Equity Incentive Plan (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 filed by Hersha Hospitality Trust on November 5, 2009 and incorporated by reference herein).†
10.25	Amendment No. 1 to the Hersha Hospitality Trust 2008 Equity Incentive Plan (filed as Appendix A to the Definitive Proxy Statement on Schedule 14A filed by Hersha Hospitality Trust on April 15, 2010 and incorporated by reference herein).†
10.26	Hersha Hospitality Trust 2012 Equity Incentive Plan (filed as Appendix A to the proxy statement on Schedule 14A filed with the SEC on April 18, 2011, and incorporated by reference herein).
10.27	Fourth Amendment to Agreement of Limited Partnership of Hersha Hospitality Trust, dated May 18, 2011 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed by Hersha Hospitality Trust on August 8, 2011 and incorporated by reference herein).
10.28	Amendment No. 1 to the Hersha Hospitality Trust 2012 Equity Incentive Plan (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 31, 2011, and incorporated by reference herein).
10.29	Master Purchase and Sale Agreement (regarding the sale of six hotel properties), dated August 15, 2011, by and among PRA Glastonbury, LLC, 44 Hersha Norwich Associates, LLC, Danbury Suites, LLC, Whitehall Mansion Partners, LLC, Southington Suites, LLC, 790 West Street, LLC and Waterford Suites, LLC, individually and collectively as sellers, and SOF-VIII U.S. Hotel Co-Invest Holdings L.P., or its designee, as purchaser (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on August 18, 2011 and incorporated by reference herein).
10.30	Master Purchase and Sale Agreement (regarding the sale of 12 hotel properties), dated August 15, 2011, by and among LTD Associates Two, LLC, LTD Associates One, LLC, HHLP Dartmouth Two Associates, LLC, HHLP Charlotte Associates, LLC, 994 Associates, 3544 Associates, 2144 Associates – Sellinsgrove, HHLP Malvern Associates, 44 Edison Associates, LLC, HHLP Scranton Associates, LLC, HHLP Bethlehem Associates, LP and 44 Laurel Associates, LLC, individually and collectively as sellers, and SOF-VIII U.S. Hotel Co-Invest Holdings L.P., or its designee, as purchaser (filed as Exhibit 10.2 to the Current Report on Form 8-K filed on August 18, 2011 and incorporated by reference herein).
10.31	Credit Agreement, dated as of November 5, 2012, among Hersha Hospitality Limited Partnership, as borrower, Hersha Hospitality Trust, as the parent REIT and a guarantor, certain direct or indirect subsidiaries of the borrower, as guarantors, Citibank, N.A., as administrative agent, and the other lenders party thereto (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on November 8, 2012, and incorporated herein by referenced).
10.32	Form of Fifth Amendment to Agreement of Limited Partnership of Hersha Hospitality Trus Limited Partnership (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 1, 2013).
10.33	Purchase and Sale Agreement (regarding the sale of sixteen hotel properties), dated September 20,2013, by and among 2144 Associates Hershey, 3144 Associates, Sawmill Three, LLC, 44 Hersha Smithfield, LLC, HHLP Brookhaven Associates, LLC, HHLP Harrisburg Friendship, LP, 44 Carlisle Associates, HHLP Langhorne One Associates, LP, Inn America Hospitality at Ewing, LLC, HHLP Wilmington Associates, LP, HHLP Oxford Valley Associates, LP, HHLP Hauppauge Associates, LLC, HHLP King of Prussia Associates, LP, HHLP Bridgewater Associates, LLC and HHLP Wilmington Associates, LP individually and collectively as sellers, and BRE NE Hospitality Holdings LLC, or its designee, as purchaser (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 25, 2013).
12.1	Statement Regarding Computation of Ratio of Per Statement Regarding the Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends.**
21.1	List of Subsidiaries of the Registrant.**
23.1	Consent of KPMG LLP.**
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**

116

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
*	Filed as an exhibit to Hersha Hospitality Trust’s Registration Statement on Form S-11, as amended, filed June 5, 1998 (SEC File No. 333-56087) and incorporated by reference herein.
**	Filed herewith.

117

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
February 26, 2014	/s/ Jay H. Shah
	Jay H. Shah
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Hasu P. Shah	Chairman and Trustee	February 26, 2014
Hasu P. Shah
/s/ Jay H. Shah	Chief Executive Officer and Trustee (Principal Executive Officer)	February 26, 2014
Jay H. Shah
/s/ Neil H. Shah	President and Chief Operating Officer (Chief Operating Officer)	February 26, 2014
Neil H. Shah
/s/ Ashish R. Parikh	Chief Financial Officer (Principal Financial Officer)	February 26, 2014
Ashish R. Parikh
/s/ Michael R. Gillespie	Chief Accounting Officer (Principal Accounting Officer)	February 26, 2014
Michael R. Gillespie
/s/ Donald J. Landry	Trustee	February 26, 2014
Donald J. Landry
/s/ Thomas J. Hutchison III	Trustee	February 26, 2014
Thomas J. Hutchison III
/s/ Michael A. Leven	Trustee	February 26, 2014
Michael A. Leven
/s/ Dianna F. Morgan	Trustee	February 26, 2014
Dianna F. Morgan
/s/ Kiran P. Patel	Trustee	February 26, 2014
Kiran P. Patel
/s/ John M. Sabin	Trustee	February 26, 2014
John M. Sabin

118

EX-12.1

Exhibit 12.1

Hersha Hospitality Trust
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends
(dollars in thousands)
		Year Ended December 31,
		2013		2012		2011		2010		2009
Earnings
Pre-tax (loss) income from continuing operations before income (loss) from equity investees	$	16,988	$	6,267	$	(1,190)	$	(12,612)	$	(33,074)
Interest expensed and amortized premiums, discounts and capitalized expenses related to indebtedness		39,984		37,295		33,447		32,167		32,403
Distributed income of equity investees		568		1,387		132		-		400
	$	57,540	$	44,949	$	32,389	$	19,555	$	(271)
Combined Fixed Charges and Preferred Share Dividends
Interest expensed and amortized premiums, discounts and capitalized expenses related to indebtedness		39,984		37,295		33,447		32,167		32,403
Interest capitalized		1,320		1,542		1,372		46		10
Preferred share distributions		14,611		14,000		10,499		4,800		4,800
	$	55,915	$	52,837	$	45,318	$	37,013	$	37,213
Ratio of earnings to combined fixed charges and preferred share dividends		1.03		*		*		*		*
For the years ended December 31, 2012, 2011, 2010, and 2009, combined fixed charges and preferred share dividends exceeded earnings. The following table notes the amounts by which combined fixed charges and preferred share dividends exceeded earnings:
		Year Ended December 31,
		2013		2012		2011		2010		2009
Combined fixed charged and preferred share dividends in excess of earnings	$	N/A	$	7,888	$	12,929	$	17,458	$	37,484

1

EX-21.1

Exhibit 21.1

Name of Entity	Ownership	Jurisdiction of Incorporation or Organization
Hersha Hospitality Trust	N/A	MD
Hersha Hospitality, LLC (“HH LLC”)	100% by HHLP	VA
Hersha Hospitality Limited Partnership (“HHLP”) (the “Operating Partnership”)	96.0% by Hersha Hospitality Trust (General Partnership Interest) 4.0% by Hersha Affiliates (Limited Partnership Interest)	VA
44 New England Management Company	100% by HHLP	VA
2144 Associates - Hershey (LP)	1% by Hersha Hospitality Limited Liability Company - Hershey 99% by HHLP	PA
Hersha Hospitality Limited Liability Company - Hershey	100% by HHLP	DE
2444 Associates (LP)	1% by Hersha Hospitality Limited Liability Company - West Hanover 99% by HHLP	PA
2144 Associates - Selinsgrove (LP)	1% by Hersha Hospitality Limited Liability Company - Selinsgrove 99% by HHLP	PA
2844 Associates, LP	1% by HH LLC 99% by HHLP	PA
HHLP 2844 Hbg Lessee, LLC	100% by 44 New England Management Company	DE
3144 Associates, LP	1% by HH LLC 99% by HHLP	PA
HHLP East Chocolate Lessee, LLC	100% by 44 New England Management Company	DE
44 Framingham Associates, LLC	100% by HHLP	MA
HHLP Framingham Lessee, LLC	100% by 44 New England Management Company	DE
Brisam, LLC	100% by HHLP	NY
HHLP MSG Lessee, LLC	100% by 44 New England Management Company	DE
44 Greenbelt One, LLC	100% by 44 New England Management Company	DE
44 Greenbelt Two, LLC	100% by 44 New England Management Company	DE
Brentwood Greenbelt, LLC	1% by Hersha Hospitality Greenbelt, LLC 99% by HHLP	VA
Golden Triangle Greenbelt, LLC	74% by Brentwood Greenbelt, LLC 26% by third parties	MD
Hersha Hospitality Greenbelt, LLC	100% by HHLP	VA
HHLP Boston Two, LLC	100% by HHLP	MA
SB Partners, LLC	49.9% by HHLP Boston Two, LLC 50.1% by third parties	MA
South Bay Sandeep, LLC	100% by SB Partners, LLC	MA
HHLP Boston One, LLC	100% by HHLP	MA
Hiren Boston, LLC	49.9% by HHLP Boston One, LLC 50.1% by third parties	MA
South Bay Boston, LLC	49.9% by 44 New England Management Company 50.1% by third parties	DE
44 Delaware Three, LLC	100% by 44 New England Management Company	DE
HHLP Oxford Valley Associates, LP	1% by HHLP Oxford Valley, Inc. 99% by HHLP	PA
HHLP Oxford Valley, Inc.	100% by HHLP	PA
HHLP Malvern 2, LLC	100% by HHLP	PA
HHLP Malvern Associates 2,LP	99% by HHLP 1% by HHLP Malvern 2, LLC	PA
HHLP Malvern, Inc.	100% by HHLP	PA
44 Delaware One, LLC	100% by 44 New England Management Company	DE
HHLP King of Prussia Associates, LP	1% by HHLP King of Prussia, Inc. 99% by HHLP	PA
HHLP King of Prussia, Inc.	100% by HHLP	PA
44 Brookline Hotel, LLC	100% by HHLP	DE
44 Brookline Management, LLC	100% by 44 New England Management Company	DE
HHLP Langhorne One Associates, LLC	1% by HHLP Langhorne One, LLC 99% by HHLP	PA
HHLP Langhorne One Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Langhorne One, LLC	100% by HHLP	PA
44 Tyson’s Corner, LLC	100% by 44 New England Management Company	DE
HHLP Tyson’s Corner Associates, LLC	100% by HHLP	DE
44 Metro, LLC	100% by 44 New England Management Company	DE

1

Name of Entity	Ownership	Jurisdiction of Incorporation or Organization
Metro JFK Associates, LLC	1% by Metro JFK Managing Member, LLC                                                                                                                99%by HHLP	NY
Metro JFK Managing Member, LLC	100% by HHLP	NY
44 Dartmouth LLC	100% by 44 New England Management Company	DE
44 Franklin Managing Member, LLC	100% by HHLP	MA
HHLP Franklin Associates, LLC	99% by HHLP 1% by Franklin Managing Member, LLC	MA
HHLP Dartmouth One Associates, LLC	99% by HHLP 1% by 44 Dartmouth One, LLC	MA
HHLP Dartmouth Two Holding, LLC	100% by HHLP	DE
44 Cambridge Associates, LLC	100% by HHLP	MA
HHLP Cambridge Lessee, LLC	100% by 44 New England Management Company	DE
44 Norwood Managing Member, LLC	100% by HHLP	DE
HHLP Norwood Associates, LLC	99% by HHLP 1% by 44 Norwood Managing Member, LLC	MA
44 Brookhaven, LLC	100% by HHLP	DE
44 Long Island One, LLC	100% by 44 New England Management Company	NY
HHLP Brookhaven Associates, LLC	99.5% by HHLP .5% by 44 Brookhaven, LLC	NY
44 Hauppauge, LLC	100% by HHLP	DE
44 Long Island One, LLC	100% by 44 New England Management Company	DE
HHLP Hauppauge Associates, LLC	99.5% by HHLP .5% by 44 Hauppauge, LLC	NY
HHLP Langhorne Two Associates, LP	1% by HHLP Langhorne Two, LLC 99% by HHLP	PA
HHLP Langhorne Two Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Langhorne Two, LLC	100% by HHLP	PA
44 Chelsea Delaware, LLC	100% by 44 New England Management Company	DE
Chelsea Grand East Manager, LLC	100% by HHLP	DE
Chelsea Grand East, LLC	1% by Chelsea Grand East Manager, LLC 99% by HHLP	NY
44 Chester Management, LLC	100% by 44 New England Management Company	DE
HHLP Chester Associates, LLC	100% by HHLP	NY
44 Carlisle Associates (LP)	1% by Hersha Hospitality, LLC 99% by HHLP	PA
HHLP RI Carlisle Lessee, LLC	100% by 44 New England Management Company	DE
320 Pearl Street, Inc.	100% by HHLP	NY
Seaport Hospitality, LLC	99% by HHLP 1% 320 Pearl Street, Inc.	DE
Seaport TRS, LLC	100% by 44 New England Management Company	DE
HHLP Fifth Avenue Manager, LLC	100% by HHLP	DE
The Inn @ Fifth Avenue, LLC	99% by HHLP 1% by HHLP Fifth Avenue Manager, LLC	NY
Hersha Conduit Associates, LLC	100% by HHLP	NY
HHLP Conduit Lessee, LLC	100% by 44 New England Management Company	NY
Risingsam Hospitality, LLC	99% by HHLP 1% by Hersha Conduit Associates, LLC	NY
Affordable Hospitality Associates, LP	99% by HHLP 1% by Race Street, LLC	PA
Philly One TRS, LLC	100% by 44 New England Management Company	PA
Race Street, LLC	100% by HHLP	PA
44 Duane Street Lessee, LLC	100% by 44 New England Management Company	NY
44 Duane Street, LLC	100% by HHLP	DE
5444 Associates (LP)	99% by HHLP 1% by 44 Duane Street, LLC	PA
44 Smith Street Lessee, LLC	100% by 44 New England Management Company	NY
HHLP Smith Street Associates, LLC	100% by HHLP Smith Street Holding, LLC	NY
HHLP Smith Street Holding, LLC	99% by HHLP 1% by HHLP Smith Street Managing Member, LLC	NY
HHLP Smith Street Managing Member, LLC	100% by HHLP	NY

2

44 Harrisburg Friendship Lessee, LLC	100% by 44 New England Management Company	PA
Name of Entity	Ownership	Jurisdiction of Incorporation or Organization
HHLP Harrisburg Friendship GP, LLC	100% by HHLP	PA
HHLP Harrisburg Friendship, LP	99% by HHLP 1% by HHLP Harrisburg Friendship GP, LLC	PA
Hersha Camp Springs Associates, LLC	99% by HHLP 1% by Hersha Camp Springs Managing Member, LLC	MD
Hersha Camp Springs Lessee, LLC	100% by 44 New England Management Company	MD
Hersha Camp Springs Managing Member, LLC	100% by HHLP	MD
44 Hersha Smithfield, LLC	99% by HHLP 1% by Hersha Smithfield Managing Member, LLC	RI
Hersha Smithfield Lessee, LLC	100% by 44 New England Management Company	DE
Hersha Smithfield Managing Member, LLC	100% by HHLP	DE
44 Pearl Street Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Pearl Street Associates, LLC	1% by HHLP Pearl Street Managing Member, LLC 99% by HHLP	DE
HHLP Pearl Street Managing Member, LLC	100% by HHLP	DE
HHLP York Street, LLC	100% by HHLP	DE
York Street Lessee DE, LLC	100% by 44 New England Management Company	DE
York Street LLC	100% by HHLP York Street, LLC	NY
44 West Haven Hospitality, LLC	100% by HHLP	CT
Sawmill Lessee, LLC	100% by 44 New England Management Company	DE
Sawmill Three, LLC	99% by HHLP 1% by 44 West Haven Hospitality, LLC	CT
HHLP Duo One Associates, LLC	1% by HHLP 99% by HHLP Duo One Managing Member, LLC	NY
HHLP Duo One Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Duo One Manager, LLC	100% by HHLP	DE
HHLP Duo Three Associates, LLC	1% by HHLP 99% by HHLP Duo Three Managing Member, LLC	DE
HHLP Duo Three Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Duo Three Manager, LLC	100% by HHLP	DE
HHLP Duo Two Associates, LLC	1% by HHLP 99% by HHLP Duo Two Managing Member, LLC	NY
HHLP Duo Two Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Duo Two Manager, LLC	100% by HHLP	DE
HHLP Valley Forge Associates (LP)	1% by HH LLC 99% by HHLP	PA
HHLP Valley Forge Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Wall Street Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Wall Street Manager, LLC	100% by HHLP	DE
Maiden Hotel LLC	1% by HHLP Wall Street Manager, LLC 99% by HHLP	NY
HHLP DC Convention Center Associates, LLC	1% by HHLP DC Convention Center Manager, LLC 99% by HHLP	DE
HHLP DC Convention Center Lessee, LLC	100% by 44 New England Management Company	DE
HHLP DC Convention Center Manager, LLC	100% by HHLP	DE
44 Alexandria Hotel Management, LLC	100% by 44 New England Management Company	DE
44 Alexandria Hotel, LLC	100% by HHLP	DE
44 Gaithersburg, LLC	100% by 44 New England Management Company	DE
HHLP Gaithersburg Associates, LLC	100% by HHLP	DE
44 White Plains, LLC	100% by 44 New England Management Company	DE
HHLP White Plains Associates, LLC	100% by HHLP	DE
HHLP Parkside Associates LLC	1% by HHLP Parkside Manager LLC 99% by HHLP	DE
HHLP Parkside Lessee LLC	100% by 44 New England Management Company	DE
HHLP Parkside Manager LLC	100% by HHLP	DE
HHLP Capitol Hill Associates, LLC	100% by HHLP Capitol Hill Holding, LLC	DE
HHLP Capitol Hill Holding, LLC	1% by HHLP Capitol Hill Manager LLC 99% by HHLP	DE
HHLP Capitol Hill Lessee, LLC	100% by 44 New England Management Company	DE

3

HHLP Capitol Hill Manager, LLC 100% by HHLP DE

Name of Entity	Ownership	Jurisdiction of Incorporation or Organization
HHLP Water Street Associates, LLC	1% by HHLP Water Street Manager, LLC 99% by HHLP	DE
HHLP Water Street Lessee, LLC	100% by 44 New England Management Company	NY
HHLP Water Street Manager, LLC	100% by HHLP	DE
44 LA Westside Lessee, LLC	100% by 44 New England Management Company	DE
HHLP LA Westside Associates, LLC	1% by HHLP Parkside Manager LLC 99% by HHLP	DE
HHLP LA Westside Manager, LLC	100% by HHLP	DE
44 Bridgewater, LLC	100% by 44 New England Management Company	DE
HHLP Bridgewater Associates, LLC	100% by HHLP	DE
HHLP Miami Beach Associates, LLC	1% by HHLP Miami Beach Manager, LLC 99% by HHLP	DE
HHLP Miami Beach Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Miami Beach Manager, LLC	100% by HHLP	DE
44 Scottsdale, LLC	100% by 44 New England Management Company	DE
HHLP Scottsdale Associates, LLC	100% by HHLP	DE
44 Pleasant Hill, LLC	100% by 44 New England Management Company	DE
HHLP Pleasant Hill Associates, LLC	100% by HHLP	DE
44 Pleasanton, LLC	100% by 44 New England Management Company	DE
HHLP Pleasanton Associates, LLC	100% by HHLP	DE
HHLP Union Square Associates, LLC	100% by HHLP	DE
HHLP Union Square Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Union Square Manager, LLC	100% by HHLP	DE
HHLP Rittenhouse Associates, LLC	99% by HHLP 1% by HHLP Rittenhouse Manager, LLC	DE
HHLP Rittenhouse Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Rittenhouse Manager, LLC	100% by HHLP	DE
HHLP Bulfinch Associates, LLC	99% by HHLP 1% by HHLP Bulfinch Manager, LLC	DE
HHLP Bulfinch Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Bulfinch Manager, LLC	100% by HHLP	DE
Brisam Management (DE) LLC	100% by third parties	DE
H Metro Delaware, LLC	100% by HHLP	DE
Metro 29th Street Associates, LLC	100% by H Metro Delaware, LLC	NY
Metro 29th Sublessee, LLC	100% by 44 New England Management Company	NY
HHLP Ewing Lessee, LLC	100% by 44 New England Management Company	DE
HT Inn America TRS, Inc.	100% by 44 New England Management Company	DE
Inn America Hospitality at Ewing, LLC	100% by HHLP	NJ
HHLP Coconut Grove Associates, LLC	99% by HHLP, 1% by HHLP Coconut Grove Manager, LLC	DE
HHLP Coconut Grove Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Coconut Grove Manager, LLC	100% by HHLP	DE
HHLP San Diego Associates, LLC	99% by HHLP 1% by HHLPSan Diego Manager, LLC	DE
HHLP San Diego Lessee, LLC	100% by 44 New England Management Company	DE
HHLP San Diego Manager, LLC	100% by HHLP	DE
HHLP Winterhaven Associates, LLC	99% by HHLP, 1% by HHLP Winterhaven Manager, LLC	DE
HHLP Winterhaven Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Winterhaven Manager, LLC	100% by HHLP	DE
HHLP Blue Moon Associates, LLC	99% by HHLP, 1% by HHLP Blue Moon Manager, LLC	DE
HHLP Blue Moon Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Blue Moon Manager, LLC	100% by HHLP	DE
Mystic Partners Leaseco, LLC	Varying Percentages (based on certain assets owned by Mystic Partners Leaseco, LLC) by 44 New England Management Company and third parties	DE
Mystic Partners, LLC	Varying Percentages (based on certain assets owned by Mystic Partners, LLC) by HHLP and by third parties	DE
Mystic Special Purpose Corp.	100% by Mystic Partners, LLC	DE

4

HT-Norwich Hotel TRS, LLC	99% by Mystic Partners Leaseco, LLC 1% by Mystic Special Purpose Corp.	DE
Norwich Hotel, LLC	99% by Mystic Partners, LLC 1% by Mystic Special Purpose Corp.	CT

Name of Entity	Ownership	Jurisdiction of Incorporation or Organization
Exit 88 Hotel, LLC	99.9% by Mystic Partners, LLC 0.1% by Mystic Special Purpose Corp.	CT
HT-Exit 88 Hotel TRS, LLC	100% by Mystic Partners Leaseco, LLC	DE
315 Trumbull Street Associates, LLC	88% by Mystic Partners, LLC 12% by a third party	CT
HT-315 Trumbull Street Associates, LLC	88% by Mystic Partners Leaseco, LLC 12% by a third party	DE
HHLP 52nd Associates, LLC	99% by HHLP 1% by HHLP 52nd Manager, LLC	DE
HHLP 52nd Lessee, LLC	100% by 44 New England Management Company	DE
HHLP 52nd Manager, LLC	100% by HHLP	DE
H Eighth Avenue Associates, LLC	100% by HHLP	NY
44 Delaware, LLC	100% by 44 New England Management Company	DE
HHLP Wilmington Associates, LP	1% by HHLP Wilmington, Inc. 99% by HHLP	DE
HHLP Wilmington, Inc.	100% by HHLP	DE
Adriaen’s Landing Hotel, LLC	95.662% by Mystic Partners, LLC 0.651% by HHLP 3.687% by a third party	CT
HT-Adriaen’s Landing Hotel TRS, LLC	95.662% by Mystic Partners Leaseco, LLC 0.651% by 44 New England Management Company 3.687% by a third party	DE
HHLP Lexington Mass Two Associates, LLC	1% by HHLP Lexington Mass Two Manager, LLC 99% by HHLP	DE
44 Hartford Associates, LLC	100% by HHLP	CT
HHLP Santa Barbara I Associates, LLC	99% by HHLP, 1% by HHLP Santa Barbara I Manager, LLC	DE
HHLP Santa Barbara I Lessee, LLC	100% by 44 New England Management Company	DE
HHLP Santa Barbara I Manager, LLC	100% by HHLP	DE

5

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of

Hersha Hospitality Trust:

We consent to the incorporation by reference in the registration statements (No. 333-82666, No. 333-113058, No. 333-142073, No. 333-142075, No. 333-147113, No. 333-156661, No. 333-163122, No. 333-163123, No. 333-167891, No. 333-169658, No. 333-174029, No. 333-187239) on Form S-3 and (No. 333-122657, No. 333-151314, No. 333-179847) on Form S-8 of Hersha Hospitality Trust and subsidiaries of our reports dated February 26, 2014,  with respect to the consolidated balance sheets of Hersha Hospitality Trust as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2013, which reports appear in the accompanying Form 10-K of Hersha Hospitality Trust.

/s/ KPMG LLP

Philadelphia,  Pennsylvania

February 26, 2014

1

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jay H. Shah, certify that:

1.           I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2013 of Hersha Hospitality Trust;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2014

/s/ Jay H. Shah

Jay H. Shah

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ashish R. Parikh, certify that:

1.           I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2013 of Hersha Hospitality Trust;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))  for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information: and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2014

/s/ Ashish R. Parikh

Ashish R. Parikh

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Hersha Hospitality Trust (the “Company”) for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay H. Shah, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 26, 2014	/s/ Jay H. Shah
	Jay H. Shah
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Hersha Hospitality Trust (the “Company”) for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ashish R. Parikh, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

7
February 26, 2014	/s/ Ashish R. Parikh
	Ashish R. Parikh
	Chief Financial Officer

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Effective Income Tax Reconciliation

		For the year ended December 31,
		2013		2012		2011
Statutory federal income tax provision	$	5,152	$	1,409	$	34
Adjustment for nontaxable loss		(7,472)		(623)		(6,170)
State income taxes, net of federal income tax effect		(1,317)		151		(1,146)
Recognition of deferred tax assets		(1,963)		-		-
Changes in valuation allowance		-		(4,292)		7,282
Total income tax benefit	$	(5,600)	$	(3,355)	$	-

Components Of The Company's Income Tax Expense (Benefit)

		For the year ended December 31,
		2013		2012		2011
Income tax expense (benefit):
Current:
Federal	$	-	$	-	$	-
State		-		229		-
Deferred:
Federal		(3,604)		(3,584)		-
State		(1,996)		-		-
Total	$	(5,600)	$	(3,355)	$	-
Income tax expense (benefit):
From continuing operations		(5,600)		(3,355)		-
From discontinued operations		190		-		-
Total	$	(5,410)	$	(3,355)	$	-

Components Of Consolidated TRS's Deferred Tax Assets

		As of December 31,
		2013		2012
Deferred tax assets:
Net operating loss carryforwards	$	8,605	$	4,234
Accrued expenses and other		685		(75)
Tax credit carryforwards		280		-
Net deferred tax assets		9,570		4,159
Valuation allowance		(804)		(804)
Deferred tax assets	$	8,766	$	3,355

Taxability Of Common And Preferred Share Distributions

	2013	2012	2011
Preferred Shares - 8% Series A
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 8% Series B
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 6.875% Series C
Ordinary income	100.00%	N/A	N/A
Return of Capital	0.00%	N/A	N/A
Capital Gain Distribution	0.00%	N/A	N/A
Common Shares - Class A
Ordinary income	45.15%	1.28%	73.30%
Return of Capital	54.85%	98.72%	26.70%
Capital Gain Distribution	0.00%	0.00%	0.00%

XML

Investment In Unconsolidated Joint Ventures (Summary Financial Information Related To Unconsolidated Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Assets [Abstract]
Investment in hotel properties, net		$ 114,221	$ 118,506
Other Assets		19,146	20,709
Assets Held For Sale			5,875
Total Assets		133,367	145,090
Liabilities and Equity [Abstract]
Mortgages and notes payable		112,654	119,236
Other liabilities		37,464	36,292
Liabilities Related to Assets Held For Sale			6,071
Equity [Abstract]
Hersha Hospitality Trust		26,230	28,581
Joint Venture Partner(s)		(42,981)	(45,090)
Total Equity		(16,751)	(16,509)
Total Liabilities and Equity		133,367	145,090
Statements of Operations [Abstract]
Room Revenue		58,273	62,058	63,896
Other Revenue		22,606	22,306	21,945
Operating Expenses		(55,179)	(57,131)	(56,607)
Interest Expense		(7,526)	(7,650)	(7,272)
Lease Expense		(996)	(3,729)	(5,505)
Property Taxes and Insurance		(3,034)	(3,438)	(4,280)
General and Administrative		(5,794)	(5,904)	(5,680)
Depreciation and Amortization		(6,697)	(6,533)	(6,034)
Loss Allocated to Noncontrolling Interests		(179)	(2,614)	(44)
Net Income from Continuing Operations		1,474	(2,635)	419
Income (Loss) from Discontinued Operations		(55)	121	1,503
Gain on Disposition of Hotel Properties	1,950	1,161	25,131
Net Income		$ 2,580	$ 22,617	$ 1,922

XML

Investment In Hotel Properties (Results of Operations for Hotels Acquired With 100% Interest) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
2013 Acquisition Activity [Member]
Business Acquisition [Line Items]
Revenue	$ 22,889
Net (Loss) Income	1,412
2013 Acquisition Activity [Member] | Hyatt Union Square, New York, NY [Member]
Business Acquisition [Line Items]
Revenue	11,272
Net (Loss) Income	(1,466)
2013 Acquisition Activity [Member] | Courtyard By Marriott, San Deigo, CA [Member]
Business Acquisition [Line Items]
Revenue	8,350
Net (Loss) Income	1,914
2013 Acquisition Activity [Member] | Residence Inn, Coconut Grove, FL [Member]
Business Acquisition [Line Items]
Revenue	2,889
Net (Loss) Income	713
2013 Acquisition Activity [Member] | Blue Moon, Miami Beach, FL [Member]
Business Acquisition [Line Items]
Revenue	175
Net (Loss) Income	111
2013 Acquisition Activity [Member] | Winter Haven, Miami Beach, FL [Member]
Business Acquisition [Line Items]
Revenue	203
Net (Loss) Income	140
2012 Acquisition Activity [Member]
Business Acquisition [Line Items]
Revenue	42,150	31,393
Net (Loss) Income	(652)	1,085
2012 Acquisition Activity [Member] | The Rittenhouse Hotel, Philadelphia, PA [Member]
Business Acquisition [Line Items]
Revenue	17,395	16,812
Net (Loss) Income	(2,827)	(1,834)
2012 Acquisition Activity [Member] | The Boxer, Boston, MA [Member]
Business Acquisition [Line Items]
Revenue	3,799	2,791
Net (Loss) Income	(241)	574
2012 Acquisition Activity [Member] | Holiday Inn Express, New York, NY [Member]
Business Acquisition [Line Items]
Revenue	16,746	10,170
Net (Loss) Income	1,541	2,142
2012 Acquisition Activity [Member] | Courtyard By Marriot, Ewing, NJ [Member]
Business Acquisition [Line Items]
Revenue	4,210	1,620
Net (Loss) Income	$ 875	$ 203

XML

Share Based Payments (Summary Of Unvested Share Awards Issued To Trustees) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Unvested Share Awards [Abstract]
Shares Vested (in shares)	1,391,883	704,962
Unearned Compensation	$ 1,305,000	$ 1,072,000
Multi-year LTIP Trustee [Member]
Unvested Share Awards [Abstract]
Shares Vested (in shares)	22,002	11,400
Unearned Compensation	124,000	113,000
Multi-year LTIP Trustee [Member] | Issued 12-27-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	12,000
Vesting Period	3 years
Vesting Schedule (in hundredths)	33.00%
Unearned Compensation	67,000
Multi-year LTIP Trustee [Member] | Issued 12-28-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	12,000
Vesting Period	3 years
Vesting Schedule (in hundredths)	33.00%
Shares Vested (in shares)	4,002
Unearned Compensation	39,000	59,000
Multi-year LTIP Trustee [Member] | Issued 06-05-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	10,800
Vesting Period	3 years
Vesting Schedule (in hundredths)	33.00%
Shares Vested (in shares)	7,200	3,600
Unearned Compensation	18,000	36,000
Multi-year LTIP Trustee [Member] | Issued 03-30-2011 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	10,800
Vesting Period	3 years
Vesting Schedule (in hundredths)	33.00%
Shares Vested (in shares)	10,800	7,800
Unearned Compensation		18,000
Annual Retainer [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	71,550,000
Unearned Compensation	220,000	160,000
Annual Retainer [Member] | Issued 12-27-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	39,133,000
Share Price on date of grant (in dollars per share)	$ 5.63
Vesting Period	1 year
Vesting Schedule (in hundredths)	100.00%
Unearned Compensation	220,000
Annual Retainer [Member] | Issued 12-28-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	32,417,000
Share Price on date of grant (in dollars per share)	$ 4.93
Vesting Period	1 year
Vesting Schedule (in hundredths)	100.00%
Unearned Compensation		$ 160,000

XML

Investment In Unconsolidated Joint Ventures (Reconciliation Of Share In Unconsolidated Joint Ventures' Equity In Investment In Unconsolidated Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Dec. 31, 2012
Investment In Unconsolidated Joint Ventures [Abstract]
Company's share of equity recorded on the joint ventures' financial statements	$ 26,230		$ 28,581
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures	(14,186)	[1]	(12,574)	[1]
Investment in Unconsolidated Joint Ventures	$ 12,044		$ 16,007

[1] Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:cumulative impairment of the Company’s investment in joint ventures not reflected on the joint ventures' financial statements;the Company’s basis in the investment in joint ventures not recorded on the joint ventures' financial statements; andaccumulated amortization of the Company’s equity in joint ventures that reflects the Company’s portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures financial statements (this excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on the Company’s consolidated statement of operations).

XML

Discontinued Operations (Real Estate Assets Sold) (Details) (USD $)	0 Months Ended	12 Months Ended																12 Months Ended							12 Months Ended
	Aug. 15, 2011 agreement	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Non-Core Portfolio II [Member] property		Dec. 31, 2013 Holiday Inn Express Camp Springs, MD [Member]	Dec. 31, 2013 Comfort Inn Harrisburg, PA [Member]	Dec. 31, 2013 Non-core Hotel Properties [Member]	Dec. 31, 2012 Non-core Hotel Properties [Member]		Dec. 31, 2011 Non-core Hotel Properties [Member]	Dec. 18, 2013 Non-core Hotel Properties [Member] property	Sep. 20, 2013 Non-core Hotel Properties [Member] property	May 08, 2012 Non-core Hotel Properties [Member] property	Feb. 23, 2012 Non-core Hotel Properties [Member] property	Aug. 15, 2011 Non-core Hotel Properties [Member] property agreement	Dec. 31, 2012 Land Parcel, Eighth Ave, Manhattan, NY [Member]	Dec. 31, 2012 Comfort Inn, North Dartmouth, MA [Member]		Dec. 31, 2011 Comfort Inn, West Hanover, MD [Member]	Dec. 31, 2011 Land Parcel, Nevins Street Brooklyn, NY [Member]	Feb. 23, 2012 Non-core Hotel Properties of Unconsolidated Joint Venture [Member] property	Aug. 15, 2011 Non-core Hotel Properties of Unconsolidated Joint Venture [Member] property	Dec. 31, 2013 Minimum [Member] Non-Core Portfolio II [Member]	Dec. 31, 2012 Minimum [Member] Non-core Hotel Properties [Member]	Dec. 31, 2013 Maximum [Member] Non-Core Portfolio II [Member]	Dec. 31, 2012 Maximum [Member] Non-core Hotel Properties [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Acquisition Date							Jun. 01, 2008	Jan. 01, 1999										Jun. 01, 2006	May 01, 2006		May 01, 1998	Jun. 01, 2007			Jan. 01, 1999	Jan. 01, 1999	Jul. 01, 2010	Jul. 01, 2007
Disposition Date					Dec. 01, 2013		Sep. 01, 2013	Jun. 01, 2013										Apr. 01, 2012	Mar. 01, 2012		Jul. 01, 2011	Dec. 01, 2011				Feb. 01, 2012		May 01, 2012
Consideration					$ 158,600,000		$ 8,500,000	$ 3,700,000		$ 155,000,000								$ 19,250,000			$ 5,250,000	$ 4,500,000
Gain on Disposition		32,121,000	11,231,000	991,000	31,559,000	[1]	120,000	442,000		4,978,000	[2]							5,037,000	1,216,000	[3]	949,000	42,000
Number of purchase and sale agreements	2																2
Number of Real Estate Properties					16								12	16	4		18							4
Disposal Group, aggregate purchase price					217,000,000												155,000,000
Number of hotel properties sold					12											14							3
Number of hotel properties held for sale																4							1
Net proceeds from sale of non-core hotel properties					158,600,000				155,000,000
Reduction in mortgage debt resulting from sale of hotel properties sold					33,044,000				61,298,000
Gain on sale of hotel properties					31,559,000				4,910,000
Impairment loss related to purchase and sales agreements	1,677,000				6,591,000							30,248,000
Gain from transfer of title																			$ 1,216,000

[1] HotelAcquisitionDateDispositionDateConsideration Gain onDispositionNon-Core Portfolio II (12)January 1999 - July 2010December 2013$ 158,600 $ 31,559 (1)Holiday Inn Express, Camp Springs, MDJune 2008September 2013 8,500  120 Comfort Inn, Harrisburg, PAJanuary 1999June 2013 3,700  442 2013 Total 32,121 Non-Core Hotel Portfolio (18)January 1999 - July 2007February 2012 & May 2012$ 155,000 $ 4,978 (2)Land Parcel, Eighth Ave, Manhattan, NYJune 2006April 2012 19,250  5,037 Comfort Inn, North Dartmouth, MAMay 2006March 2012 - 1,216 (3)2012 Total$ 11,231 Comfort Inn, West Hanover, PAMay 1998July 2011$ 5,250 $ 949 Land Parcel, Nevins Street, Brooklyn, NYJune 2007December 2011 4,500  42 2011 Total$ 991 In September 2013, our Board of Trustees authorized management of the Company to sell this portfolio. On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties, for an aggregate purchase price of approximately $217,000.  The 16 non-core hotel properties in the portfolio were acquired by the Company between 1999 and 2010. We recorded an impairment loss of approximately $6,591 for those assets for which the anticipated net proceeds do not exceed the carrying value. On December 20, 2013, the Company closed on the sale of 12 of these non-core hotel properties. As a result of entering into these purchase and sale agreements for the 16 non-core assets mentioned above, the operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2013, 2012, and 2011.  The 12 assets were sold for a total sales price of $158,600, reduced the Company’s consolidated mortgage debt by $33,044 and generated a gain on sale of approximately $31,559.   In February 2014, the remaining 4 assets were sold for a total sales price of $58,400 and reduced the Company’s consolidated mortgage debt by $45,710.

[2] In May 2011, our Board of Trustees authorized management of the Company to sell this portfolio. On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture, for an aggregate purchase price of approximately $155,000.  The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006. As a result of entering into these purchase and sale agreements for the 18 non-core assets mentioned above, we recorded an impairment loss in 2011 of approximately $30,248 for those consolidated assets for which the anticipated net proceeds did not exceed the carrying value.On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three hotel properties owned in part by the Company through an unconsolidated joint venture, and closed on the remaining 4 properties, on May 8, 2012, including one hotel property owned in part by the Company through an unconsolidated joint venture.  The operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2012 and 2011.  The 18 assets were sold for a total sales price of $155,000, reduced the Company’s consolidated mortgage debt by $61,298 and generated a gain on sale of approximately $4,910.

[3] On March 30, 2012, we transferred the title to the Comfort Inn, located in North Dartmouth, to the lender.  Previously, we had ceased operations at this property on March 31, 2011.  The operating results were reclassified to discontinued operations in the statements of operations for the years ended December 31, 2012 and 2011.  The transfer of the title resulted in a gain of approximately $1,216, since the outstanding mortgage loan payable exceeded the net book value of the property

XML

Investment In Hotel Properties (Investment In Hotel Properties) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Business Acquisition [Line Items]
Total investment in hotel properties, gross	$ 1,795,950	$ 1,732,615
Less accumulated depreciation	(260,115)	(265,902)
Total investment in hotel properties, net	1,535,835	1,466,713
Land [Member]
Business Acquisition [Line Items]
Total investment in hotel properties, gross	339,027	305,286
Building and Improvements [Member]
Business Acquisition [Line Items]
Total investment in hotel properties, gross	1,222,639	1,214,865
Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total investment in hotel properties, gross	171,116	171,892
Construction In Progress [Member]
Business Acquisition [Line Items]
Total investment in hotel properties, gross	$ 63,168	$ 40,572

XML

Commitments And Contingencies And Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2013

Commitments And Contingencies And Related Party Transactions [Abstract]

Future Minimum Lease Payments

Year Ending December 31,		Amount
2014	$	735
2015		735
2016		735
2017		735
2018		735
Thereafter		60,930
	$	64,605

XML

Shareholders' Equity And Noncontrolling Interests In Partnership (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stockholders' Equity Note [Abstract]
Total number of Common Units outstanding (in shares)	6,914,716	7,112,506	7,270,316
Common units converted to Class A Common Shares (in shares)	27,790	157,810	195,000
Common Units redeemed	170,000

XML

Earnings Per Share (Potentially Dilutive Shares Excluded From The Denominator For The Purpose Of Computing Diluted Earnings Per Share) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially Dilutive Securities Excluded from the Denominator	6,968,035	10,695,345	12,336,940
Common Units of Limited Partnership Interest [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially Dilutive Securities Excluded from the Denominator	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially Dilutive Securities Excluded from the Denominator		433,097	584,216
Contingently Issuable Share Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially Dilutive Securities Excluded from the Denominator		2,778,545	2,097,456
Options To Acquire Common Shares Outstanding [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially Dilutive Securities Excluded from the Denominator		275,580	2,360,156

XML

Schedule III - Real Estate And Accumulated Depreciation (Reconciliation Of Real Estate and Accumulated Depreciation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011
Reconciliation of Real Estate [Roll Forward]
Balance at beginning of year	$ 1,520,151		$ 1,481,433	$ 1,291,213
Additions during the year	275,032		167,916	248,358
Dispositions / Deconsolidation of consolidated joint venture during the year	(156,504)		(127,992)	(29,216)
Changes/Impairments in Assets Held for Sale	(9,367)		(1,206)	(141,633)
Investment in Real Estate	1,629,312		1,520,151	1,368,722
Assets Held for Sale, net of impairment				112,711
Total Real Estate	1,629,312		1,520,151	1,481,433
Reconciliation of Accumulated Depreciation [Roll Forward]
Balance at beginning of year	150,353		139,057	112,161
Depreciation for year	39,771		35,597	28,229
Changes/Impairments in Assets Held for Sale	51
Accumulated depreciation on assets sold	(27,986)		(24,301)	(1,333)
Balance at end of year	$ 162,189	[1]	$ 150,353	$ 139,057

[1] Assets are depreciated over a 7 to 40 year life, upon which the latest income statement is computed

XML

Development Loans Receivable (Development Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified				0 Months Ended	12 Months Ended				0 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Apr. 09, 2013 Hyatt Union Square, New York, NY [Member]	Dec. 31, 2013 Operational Hotels [Member] Hyatt 48Lex, New York, NY [Member] 44 Lexington Holding, LLC [Member]		Dec. 31, 2012 Operational Hotels [Member] Hyatt 48Lex, New York, NY [Member] 44 Lexington Holding, LLC [Member]		Apr. 09, 2013 Construction Hotels [Member] Hyatt Union Square, New York, NY [Member] Risingsam Union Square, LLC [Member]	Dec. 31, 2013 Construction Hotels [Member] Hyatt Union Square, New York, NY [Member] Risingsam Union Square, LLC [Member]		Dec. 31, 2012 Construction Hotels [Member] Hyatt Union Square, New York, NY [Member] Risingsam Union Square, LLC [Member]
Receivables, Loans, Notes Receivable, and Others, Schedule of Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal Outstanding	$ 28,425	$ 35,747	$ 41,653				$ 15,122	[1]				$ 13,303	[2]
Interest Rate					9.00%	[1],[3]				10.00%	[2]
Cumulative interest income paid in kind							678
Acquisition Date				Apr. 09, 2013					Apr. 09, 2013
Business acquisition, cash paid									36,000
Development loan on the re-development project cancelled									10,000
Business acquisition, cancellation of accrued interest receivable									$ 3,303

[1] Indicates borrower is a related party

[2] On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY from Risingsam Union Square, LLC.  Consideration given in exchange for the property including $36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan.  See “Note 2 -Investment In Hotel Properties” for additional discussion of this transaction.

[3] Prior to June 1, 2012, the development loan to 44 Lexington Holding LLC allowed the borrower to elect, quarterly, to pay accrued interest in-kind by adding the accrued interest to the principal balance of the loan.  Effective June 1, 2012, we amended the development loan with 44 Lexington Holding LLC to cease the buyer’s election to pay accrued interest in-kind.  Interest of $678 was added to principal during the year ended December 31, 2012.

XML

Discontinued Operations (Assets Held For Sale) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Long Lived Assets Held-for-sale [Line Items]
Assets Held for Sale, Gross	$ 76,844
Less Accumulated Depreciation & Amortization	(20,261)
Assets Held for Sale	56,583
Liabilities Related To Assets Held for Sale	45,835
Land [Member]
Long Lived Assets Held-for-sale [Line Items]
Assets Held for Sale, Gross	9,517
Building and Improvements [Member]
Long Lived Assets Held-for-sale [Line Items]
Assets Held for Sale, Gross	58,129
Furniture, Fixtures And Equipment [Member]
Long Lived Assets Held-for-sale [Line Items]
Assets Held for Sale, Gross	$ 9,198

XML

Selected Quarterly Financial Data (Unaudited) (Selected Quarterly Financial Data (Unaudited)) (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Selected Quarterly Financial Information [Abstract]
Total Revenues	$ 92,510,000	$ 90,741,000	$ 91,068,000	$ 65,878,000	$ 82,741,000	$ 82,355,000	$ 81,361,000	$ 56,069,000	$ 338,413,000		$ 301,215,000		$ 232,913,000
Total Expenses	90,820,000	87,512,000	71,703,000	73,174,000	80,059,000	77,480,000	73,097,000	65,623,000	281,783,000		255,035,000		199,999,000
(Loss) Income from Unconsolidated Joint Ventures	(1,814,000)	227,000	148,000	(396,000)	(153,000)	(1,431,000)	190,000	(730,000)	(1,835,000)		(2,124,000)		1,290,000
(Loss) Income from Continuing Operations	(124,000)	3,456,000	19,513,000	(7,692,000)	2,529,000	3,444,000	8,454,000	(10,284,000)	20,753,000		7,498,000		100,000
Income Tax Benefit	3,318,000	2,375,000	(1,222,000)	1,129,000	3,355,000				5,600,000		3,355,000
Income (Loss) from Discontinued Operations (including Gain on Disposition of Hotel Properties)	34,046,000	(3,532,000)	(206,000)	(1,113,000)	965,000	2,450,000	8,935,000	2,370,000	29,195,000		14,720,000		(27,068,000)
Net (Loss) Income	37,240,000	2,299,000	18,085,000	(7,676,000)	6,849,000	5,894,000	17,389,000	(7,914,000)	49,948,000		22,218,000		(26,968,000)
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations	962,000	(164,000)	210,000	(673,000)	66,000	(279,000)	796,000	(741,000)	335,000		(158,000)		(1,734,000)
Issuance Costs of Redeemed Preferred Stock				2,250,000					2,250,000
Preferred Distributions	3,589,000	3,589,000	3,589,000	3,844,000	3,500,000	3,500,000	3,500,000	3,500,000	14,611,000		14,000,000		10,499,000
Net (Loss) Income applicable to Common Shareholders	$ 32,689,000	$ (1,126,000)	$ 14,286,000	$ (13,097,000)	$ 3,283,000	$ 2,673,000	$ 13,093,000	$ (10,673,000)	$ 32,752,000		$ 8,376,000		$ (35,733,000)
Basic and diluted earnings per share [Abstract]
(Loss) Income from continuing operations applicable to common shareholders ( in dollars per share)	$ 0.00	$ 0.01	$ 0.08	$ (0.07)	$ 0.01	$ 0.00	$ 0.03	$ (0.09)
Discontinued Operations (in dollars per share)	$ 0.16	$ (0.02)	$ (0.01)		$ 0.01	$ 0.01	$ 0.04	$ 0.03
Net (Loss) Income applicable to Common Shareholders (in dollars per share)	$ 0.16	$ (0.01)	$ 0.07	$ (0.07)	$ 0.02	$ 0.01	$ 0.07	$ (0.06)
Weighted Average Common Shares Outstanding [Abstract]
Basic (in shares)	198,994,277	198,878,496	198,633,051	197,029,017	196,411,729	196,360,325	186,264,437	170,427,428	198,390,450		187,415,270		168,753,382
Diluted (in shares)	198,994,277	201,644,633	201,201,337	197,029,017	199,593,648	196,360,325	189,011,990	170,427,428	201,918,177	[1]	187,415,270	[1]	168,753,382	[1]

[1] Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

XML

Income Taxes (Effective Income Tax Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended					12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Statutory federal income tax provision						$ 5,152	$ 1,409	$ 34
Adjustment for nontaxable loss						(7,472)	(623)	(6,170)
State income taxes, net of federal income tax effect						(1,317)	151	(1,146)
Recognition of deferred tax assets						(1,963)
Changes in valuation allowance							(4,292)	7,282
Total income tax benefit	$ (3,318)	$ (2,375)	$ 1,222	$ (1,129)	$ (3,355)	$ (5,600)	$ (3,355)

XML

Schedule III - Real Estate And Accumulated Depreciation (Narrative) (Details) (USD $) In Thousands, unless otherwise specified				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Maximum [Member]
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Useful life of buildings and improvements				7 years	40 years
Aggregate cost of land, buildings and improvements	$ 1,575,555	$ 1,278,318	$ 1,362,064

XML

Discontinued Operations (Components Of Discontinued Operations) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenue [Abstract]
Hotel Operating Revenues	$ 58,045,000	$ 63,465,000	$ 96,901,000
Other Revenues		11,000	55,000
Total Revenues	58,045,000	63,476,000	96,956,000
Expenses [Abstract]
Hotel Operating Expenses	35,158,000	39,046,000	60,288,000
Hotel Ground Rent		72,000	433,000
Real Estate and Personal Property Taxes and Property Insurance	3,316,000	3,636,000	5,460,000
General and Administrative	36,000	27,000	597,000
Acquisition and Termination Transaction Costs		8,000	(17,000)
Depreciation and Amortization	7,050,000	9,148,000	15,142,000
Interest Expense	4,863,000	7,872,000	12,817,000
Other Expense	44,000	10,000	4,000
Loss on Debt Extinguishment		168,000	43,000
Income Tax Expense	190,000
Total Expenses	50,657,000	59,987,000	94,767,000
Income from Discontinued Operations	$ 7,388,000	$ 3,489,000	$ 2,189,000

XML

Share Based Payments (Summary Of Unvested Share Awards Issued To Nonemployees) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Unvested Share Awards [Abstract]
Shares Vested (in shares)	1,391,883	704,962
Unearned Compensation	$ 1,305,000	$ 1,072,000
Non-employees [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	58,500
Shares Vested (in shares)	43,499	15,000
Unearned Compensation	81,000	74,000
Non-employees [Member] | Issued 02-01-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	30,000
Share Price on date of grant (in dollars per share)	$ 5.41
Vesting Period	2 years
Vesting Schedule (in hundredths)	50.00%
Shares Vested (in shares)	14,999
Unearned Compensation	81,000
Non-employees [Member] | Issued 03-26-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	28,500
Share Price on date of grant (in dollars per share)	$ 5.45
Vesting Period	2 years
Vesting Schedule (in hundredths)	50.00%
Shares Vested (in shares)	28,500	15,000
Unearned Compensation		$ 74,000

XML

Schedule III - Real Estate And Accumulated Depreciation

12 Months Ended

Dec. 31, 2013

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

Schedule III - Real Estate And Accumulated Depreciation

		Initial Costs		Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period			Accumulated Depreciation	Net Book Value
Description	Encumbrances	Land	Buildings &     Improvements	Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total	Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Residence Inn, Framingham, MA	-	1,325	12,737	-	1,924	1,325	14,661	15,986	($3,923)	12,063	03/26/04
Hampton Inn, New York, NY	(23,650)	5,472	23,280	-	1,440	5,472	24,720	30,192	(5,927)	24,265	04/01/05
Residence Inn, Greenbelt, MD	(10,491)	2,615	14,815	-	2,233	2,615	17,048	19,663	(4,351)	15,312	07/16/04
Courtyard, Brookline, MA	(37,065)	-	47,414	-	1,435	-	48,849	48,849	(11,045)	37,804	06/16/05
Residence Inn, Tyson's Corner, VA	-	4,283	14,475	-	1,860	4,283	16,335	20,618	(3,498)	17,120	02/02/06
Hilton Garden Inn, JFK Airport, NY	(20,016)	-	25,018	-	2,466	-	27,484	27,484	(5,801)	21,683	02/16/06
Hawthorne Suites, Franklin, MA	(7,697)	1,872	8,968	-	364	1,872	9,332	11,204	(1,922)	9,282	04/25/06
Holiday Inn Exp, Cambridge, MA	-	1,956	9,793	-	2,338	1,956	12,131	14,087	(2,926)	11,161	05/03/06
Residence Inn, Norwood, MA	-	1,970	11,761	-	1,470	1,970	13,231	15,201	(2,418)	12,783	07/27/06
Hampton Inn, Chelsea, NY	(34,204)	8,905	33,500	-	1,856	8,905	35,356	44,261	(7,131)	37,130	09/29/06
Hyatt House, Gaithersburg, MD	(13,720)	2,912	16,001	-	3,372	2,912	19,373	22,285	(3,742)	18,543	12/28/06
Hyatt House, Pleasant Hills, CA	(20,160)	6,216	17,229	-	2,953	6,216	20,182	26,398	(3,356)	23,042	12/28/06
Hyatt House, Pleasanton, CA	(14,490)	3,941	12,560	-	3,441	3,941	16,001	19,942	(3,024)	16,918	12/28/06
Hyatt House, Scottsdale, AZ	(16,778)	3,060	19,968	-	3,350	3,060	23,318	26,378	(4,610)	21,768	12/28/06
Hyatt House, White Plains, NY	(33,030)	8,823	30,273	-	2,537	8,823	32,810	41,633	(6,383)	35,250	12/28/06
Holiday Inn Exp & Suites, Chester, NY	(6,366)	1,500	6,671	-	219	1,500	6,890	8,390	(1,208)	7,182	01/25/07
Hampton Inn, Seaport, NY	(18,047)	7,816	19,040	-	692	7,816	19,732	27,548	(3,472)	24,076	02/01/07
Hotel 373-5th Ave, New York, NY	(18,477)	14,239	16,778	-	129	14,239	16,907	31,146	(2,816)	28,330	06/01/07
Sheraton Hotel, JFK Airport, NY	-	-	27,315	-	969	-	28,284	28,284	(4,048)	24,236	06/13/08
Hampton Inn, Philadelphia, PA	-	3,490	24,382	-	5,901	3,490	30,283	33,773	(9,468)	24,305	02/15/06
Duane Street, Tribeca, NY	(14,597)	8,213	12,869	-	1,238	8,213	14,107	22,320	(2,411)	19,909	01/04/08
NU Hotel, Brooklyn, NY	-	-	22,042	-	638	-	22,680	22,680	(3,212)	19,468	01/14/08

			Initial Costs			Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period				Accumulated Depreciation	Net Book Value
Description		Encumbrances	Land	Buildings &     Improvements		Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total		Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Hilton Garden Inn, Tribeca, NY		(31,317)	21,077	42,955		-	278	21,077	43,233	64,310		(5,091)	59,219	05/01/09
Hampton Inn, Times Square, NY		-	10,691	41,637		-	275	10,691	41,912	52,603		(4,079)	48,524	02/09/10
Holiday Inn Express, Times Square, NY		-	11,075	43,113		-	46	11,075	43,159	54,234		(4,204)	50,030	02/09/10
Candlewood Suites, Times Square, NY		-	10,281	36,687		-	41	10,281	36,728	47,009		(3,569)	43,440	02/09/10
Hyatt Place, KOP, PA		-	1,133	7,267		-	3,908	1,133	11,175	12,308		(3,791)	8,517	08/17/10
Holiday Inn Express, Wall Street, NY		-	12,152	21,100		-	186	12,152	21,286	33,438		(1,959)	31,479	05/07/10
Hampton Inn, Washington, DC		-	9,335	58,048		-	1,102	9,335	59,150	68,485		(5,031)	63,454	09/01/10
Courtyard, Alexandria, VA		(23,755)	6,376	26,089		-	2,465	6,376	28,554	34,930		(5,700)	29,230	09/29/06
Sheraton, Wilmington South, DE		-	1,765	16,929		-	1,068	1,765	17,997	19,762		(1,932)	17,830	12/21/10
Holiday Inn, Water Street, NY		-	7,341	28,591		-	217	7,341	28,808	36,149		(1,814)	34,335	03/25/11
Capital Hill Suites Washington, DC		(27,119)	8,095	35,141		-	2,801	8,095	37,942	46,037		(2,955)	43,082	04/15/11
Courtyard, LA Westside, CA		(30,000)	13,489	27,025		-	1,795	13,489	28,820	42,309		(1,884)	40,425	05/19/11
Courtyard, Miami, FL		(60,000)	35,699	55,805		1	51	35,700	55,856	91,556		(2,971)	88,585	11/16/11
The Rittenhouse Hotel, PA		-	7,108	29,556		-	7,486	7,108	37,042	44,150		(2,513)	41,637	03/01/12
The Boxer, Boston, MA		-	1,456	14,954		-	1,419	1,456	16,373	17,829		(759)	17,070	05/07/12
Holiday Inn Express, Manhattan, NY		-	30,329	57,016		-	713	30,329	57,729	88,058		(2,276)	85,782	06/18/12
Hyatt, Union Square, NY		(55,000)	32,940	79,300		-	177	32,940	79,477	112,417		(1,445)	110,972	04/09/13
Courtyard, San Diego, CA		-	15,656	51,674		-	40	15,656	51,715	67,371		(754)	66,617	05/30/13
Residence Inn, Coconut Grove, FL		-	4,146	17,456		-	9	4,146	17,466	21,612		(245)	21,367	06/12/13
Winter Haven Hotel, Miami Beach, FL		-	5,400	18,147		-	-	5,400	18,148	23,548		15	23,563	12/20/13
Blue Moon Hotel, Miami Beach, FL		-	4,874	20,354		-	-	4,874	20,355	25,229		17	25,246	12/20/13
Total Investment in Real Estate	$	($515,979)	339,026	1,155,733	$	1	66,902	339,027	1,222,639	1,561,666	$	(149,632)	1,412,034

			Initial Costs			Costs Capitalized Subsequent to Acquisition		Gross Amounts at which Carrried at Close of Period				Accumulated Depreciation	Net Book Value
Assets Held For Sale
		Encumbrances	Land	Buildings &     Improvements		Land	Buildings &   Improvements	Land	Buildings &   Improvements	Total		Buildings & Improvements*	Land, Buildings & Improvements	Date of Acquisition
Holiday Inn Exp, Langhorne, PA		(5,881)	1,088	6,573		(111)	(353)	977	6,220	7,197		(1,519)	5,678	05/26/05
Holiday Inn Exp, King of Prussia, PA		(11,628)	2,557	13,339		-	1,738	2,557	15,077	17,634		(3,441)	14,193	05/23/05
Courtyard, Langhorne, PA		(13,834)	3,064	16,068		-	986	3,064	17,054	20,118		(3,632)	16,486	01/03/06
Hyatt House, Bridgewater, NJ		(14,492)	3,373	19,685		(454)	92	2,919	19,778	22,697		(3,965)	18,732	12/28/06
Total Assets Held For Sale	$	(45,835)	10,082	55,665	$	(565)	2,463	9,517	58,129	67,646	$	(12,557)	55,089
Total Real Estate	$	(561,814)	349,108	1,211,398	$	(564)	69,365	348,544	1,280,768	1,629,312	$	(162,189)	1,467,123

*Assets are depreciated over a 7 to 40 year life, upon which the latest income statement is computed

The aggregate cost of land, buildings and improvements for Federal income tax purposes for the years ended December 31, 2013, 2012 and 2011 is approximately $1,575,555,  $1,278,318, and $1,362,064 respectively.

Depreciation is computed for buildings and improvements using a useful life for these assets of 7 to 40 years.

See Accompanying Report of Independent Registered Public Accounting Firm

	2013		2012		2011
Reconciliation of Real Estate
Balance at beginning of year	$	1,520,151	$	1,481,433	$	1,291,213
Additions during the year		275,032		167,916		248,358
Dispositions/Deconsolidation of consolidated joint venture during the year		(156,504)		(127,992)		(29,216)
Changes/Impairments in Assets Held for Sale		(9,367)		(1,206)		(141,633)
Investment in Real Estate		1,629,312		1,520,151		1,368,722
Assets Held for Sale, net of impairment		-		-		112,711
Total Real Estate	$	1,629,312	$	1,520,151	$	1,481,433
Reconciliation of Accumulated Depreciation
Balance at beginning of year	$	150,353	$	139,057	$	112,161
Depreciation for year		39,771		35,597		28,229
Changes/Impairments in Assets Held for Sale		51		-		-
Accumulated depreciation on assets sold		(27,986)		(24,301)		(1,333)
Balance at the end of year	$	162,189	$	150,353	$	139,057

XML

Investment In Hotel Properties (Schedule Of Capitalized Expenditures Related To Hotel Development Projects And Renovations) (Details) (Hampton Inn, Pearl Street, New York, NY [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Capitalized Expenditures Related To Development Costs [Line Items]
Development costs	$ 1,709	$ 1,847	$ 1,791
Property Tax [Member]
Capitalized Expenditures Related To Development Costs [Line Items]
Development costs	388	296	218
Interest Expense [Member]
Capitalized Expenditures Related To Development Costs [Line Items]
Development costs	1,318	1,542	1,372
Utility [Member]
Capitalized Expenditures Related To Development Costs [Line Items]
Development costs	$ 3	$ 9	$ 201

XML

Organization And Summary Of Significant Accounting Policies (Joint Venture Properties) (Details)	12 Months Ended
	Dec. 31, 2013
Mystic Partners, LLC [Member] | Marriott Mystic, CT [Member] | Mystic Partners Leaseco, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	66.70%
Mystic Partners, LLC [Member] | Hilton, Hartford, CT [Member] | Mystic Partners Leaseco, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	8.80%
Mystic Partners, LLC [Member] | Courtyard, Norwich, CT [Member] | Mystic Partners Leaseco, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	66.70%
Mystic Partners, LLC [Member] | Marriott, Hartford, CT [Member] | Mystic Partners Leaseco, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	15.00%
SB Partners, LLC [Member] | Holiday Inn Express South Boston, MA [Member] | South Bay Sandeep, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	50.00%
Hiren Boston, LLC [Member] | Courtyard South Boston, MA [Member] | South Bay Boston, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Ownership percentage (in hundredths)	50.00%

XML

Cash Flow Disclosures And Non Cash Investing And Financing Activities (Non-cash Investing And Financing Activities) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Non-cash Investing and Financing Activities [Abstract]
Common Shares issued as part of the Dividend Reinvestment Plan	$ 38,000	$ 24,000	$ 14,000
Issuance of Common Units			204,000
Debt assumed, net of discount		85,913,000	62,552,000
Development loan accrued interest revenue receivable paid in-kind by adding balance to development loan principal		678,000	2,094,000
Settlement of development loan receivable principal and accrued interest revenue receivable	13,303,000		8,300,000
Disposition of hotel properties [Abstract]
Investment in hotel properties, net, conveyed to mortgage lender		1,938,000
Debt conveyed to mortgage lender		2,940,000
Debt assumed by purchaser		54,217,000
Conversion of Common Units to Common Shares	106,000	572,000	639,000
Reallocation of noncontrolling interest		$ (966,000)	$ 3,835,000

XML

Cash Flow Disclosures And Non Cash Investing And Financing Activities (Tables)

12 Months Ended

Dec. 31, 2013

Cash Flow Disclosures And Non Cash Investing And Financing Activities [Abstract]

Non-cash Investing And Financing Activities

	2013		2012		2011
Common Shares issued as part of the Dividend Reinvestment Plan	$	38	$	24	$	14
Acquisition of hotel properties and consolidation of variable interest entities:
Issuance of Common Units		-		-		204
Debt assumed, net of discount		-		85,913		62,552
Development loan accrued interest revenue receivable paid in-kind by adding balance to development loan principal		-		678		2,094
Settlement of development loan receivable principal and accrued interest revenue receivable		13,303		-		8,300
Disposition of hotel properties
Investment in hotel properties, net, conveyed to mortgage lender		-		1,938		-
Debt conveyed to mortgage lender		-		2,940		-
Debt assumed by purchaser		-		54,217		-
Conversion of Common Units to Common Shares		106		572		639
Reallocation of noncontrolling interest		-		(966)		3,835

XML

Investment In Unconsolidated Joint Ventures (Investment In Unconsolidated Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Investments in Unconsolidated Joint Ventures [Line Items]
Investment in unconsolidated joint ventures	$ 12,044	$ 16,007
SB Partners, LLC [Member] | Holiday Inn Express, Boston, MA [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Percent Owned	50.00%
Investment in unconsolidated joint ventures	1,057	1,292
Hiren Boston, LLC [Member] | Courtyard by Marriott, Boston, MA [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Percent Owned	50.00%
Investment in unconsolidated joint ventures	4,777	4,964
Mystic Partners, LLC [Member] | Hilton and Marriott branded hotels in CT and RI [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Preferred Return	8.50%
Investment in unconsolidated joint ventures	$ 6,210	$ 9,751
Mystic Partners, LLC [Member] | Hilton and Marriott branded hotels in CT and RI [Member] | Minimum [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Percent Owned	8.80%
Mystic Partners, LLC [Member] | Hilton and Marriott branded hotels in CT and RI [Member] | Maximum [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Percent Owned	66.70%

XML

Fair Value Measurements And Derivative Instruments (Fair Value Of Interest Rate Swaps And Caps) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended		12 Months Ended				12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended			12 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Interest Rate Swap for Holiday Inn Express Times Square, New York, NY [Member]		Dec. 31, 2012 Interest Rate Swap for Holiday Inn Express Times Square, New York, NY [Member]		Dec. 31, 2013 Interest Rate Swap: CY Westside, Culver City, LA [Member]	Dec. 31, 2012 Interest Rate Swap: CY Westside, Culver City, LA [Member]	Dec. 31, 2013 Interest Rate Swap: Capitol Hill Suites, Washington, DC [Member]	Dec. 31, 2012 Interest Rate Swap: Capitol Hill Suites, Washington, DC [Member]	Dec. 31, 2013 Interest Rate Cap for Hotel 373, New York, NY [Member]	Dec. 31, 2012 Interest Rate Cap for Hotel 373, New York, NY [Member]	Dec. 31, 2013 Interest Rate Courtyard by Marriott, Miami, FL [Member]	Dec. 31, 2012 Interest Rate Courtyard by Marriott, Miami, FL [Member]	Dec. 31, 2013 Subordinated Notes Payable [Member]	Dec. 31, 2013 Corporate Credit Facility - I [Member] Unsecured Term Loan [Member]	Dec. 31, 2012 Corporate Credit Facility - I [Member] Unsecured Term Loan [Member]	Dec. 31, 2013 Corporate Credit Facility - II [Member] Unsecured Term Loan [Member]	Dec. 31, 2012 Corporate Credit Facility - II [Member] Unsecured Term Loan [Member]	Dec. 31, 2013 Interest Rate Cap Hyatt Union Square, New York, NY [Member]	Apr. 09, 2013 Interest Rate Cap Hyatt Union Square, New York, NY [Member]
Derivatives, Fair Value [Line Items]
Strike Rate			1.24%	[1]			1.097%		0.54%		2.00%		0.82%		2.00%	0.545%		0.60%		2.00%
Index: Variable interest rate basis			1-Month LIBOR + 4.00%	[1]			1-Month LIBOR + 3.85%		1-Month LIBOR + 3.25%		1-Month LIBOR + 3.85%		1-Month LIBOR + 3.50%		1-Month LIBOR + 3.00%	1-Month LIBOR + 2.40%		1-Month LIBOR + 2.40%		1-Month LIBOR + 4.19%
Index: Basis spread on variable rate basis (in hundredths)			4.00%				3.85%		3.25%		3.85%		3.50%		3.00%	2.40%		2.40%		4.19%	2.00%
Effective Date			May 31, 2011	[1]			Sep. 29, 2011		Feb. 01, 2012		May 24, 2012		Jul. 02, 2012		Jul. 30, 2012	Nov. 05, 2012		Dec. 18, 2012		Apr. 09, 2013
Maturity Date			Jun. 01, 2014	[1]			Sep. 29, 2015		Feb. 01, 2015		Jun. 01, 2015		Jul. 01, 2016		Jul. 30, 2014	Nov. 05, 2016		Nov. 05, 2016		Apr. 09, 2016
Notional amount							$ 30,000		$ 27,119		$ 18,477		$ 60,000		$ 51,548	$ 100,000		$ 50,000		$ 55,000	$ 55,000
Estimated Fair Value	(172)	(2,186)			(530)	[1]	(374)	(559)	(88)	(143)	1	6	(354)	(658)		430	(135)	137	(167)	76
Settlement of interest rate cap	$ 565		$ 565

[1] On January 3, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY and paid $565 to settle its obligation under the swap. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012.

XML

Debt (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	12 Months Ended				12 Months Ended	1 Months Ended	0 Months Ended				0 Months Ended		12 Months Ended						12 Months Ended
	Apr. 24, 2013	Dec. 31, 2013	Dec. 31, 2012 loan	Dec. 31, 2011	Jan. 03, 2013	Dec. 31, 2013 Residence Inn, Tysons Corner, VA [Member]	Jan. 31, 2014 Duane Street Hotel, New York, NY [Member]	Apr. 24, 2013 Courtyard by Marriott, Westside, Los Angeles, CA [Member]	Jan. 31, 2012 Capitol Hill Suites, Washington, D.C. [Member]	May 09, 2012 Courtyard by Marriott, Miami, FL [Member]	Jul. 02, 2012 Courtyard by Marriott, Miami, FL [Member]	May 23, 2012 Hotel 373, Fifth Avenue, NY [Member]	Jun. 29, 2012 Holiday Inn Express, New York, NY [Member]	Dec. 31, 2013 Holiday Inn Express, New York, NY [Member]	Dec. 31, 2012 Holiday Inn Express, Times Square, NY [Member]	Dec. 31, 2013 Mortgages [Member]	Dec. 31, 2012 Mortgages [Member]	Dec. 31, 2011 Mortgages [Member]	Dec. 31, 2013 Mortgages [Member] Assets Held-for-sale [Member]	Dec. 31, 2013 Junior Subordinated Debt [Member] Hersha Statutory Trust I and Hersha Statutory Trust II [Member] loan	Dec. 31, 2012 Junior Subordinated Debt [Member] Hersha Statutory Trust I and Hersha Statutory Trust II [Member]	Dec. 31, 2011 Junior Subordinated Debt [Member] Hersha Statutory Trust I and Hersha Statutory Trust II [Member]	Dec. 31, 2013 Junior Subordinated Debt [Member] Hersha Statutory Trust I [Member]	Dec. 31, 2013 Junior Subordinated Debt [Member] Hersha Statutory Trust II [Member]	Dec. 31, 2012 Secured Credit Facility [Member]
Mortgages and Notes Payable [Abstract]
Long-term debt		$ 819,336														$ 617,788	$ 641,160		$ 45,835
Interest rate range, minimum (in hundredths)																3.79%
Interest rate range, maximum (in hundredths)																8.25%
Net unamortizaed premiums		2,466														2,466	3,245
Interest expense																34,854	38,343	39,786		1,712	1,810	1,727
Debt covenant compliance status																We have determined that certain debt service coverage ratio covenants contained in the loan agreements securing seven of our hotel properties were not met as of December 31, 2013. Pursuant to these loan agreements, the lender has elected to escrow the operating cash flow for a number of these properties. However, these covenants do not constitute an event of default for these loans.
Maturity date range, start																Oct. 01, 2014
Maturity date range, end																Feb. 01, 2018
Subordinated Notes Payable [Abstract]
Number of debt instruments																				2
Subordinated notes payable																				51,548			25,774	25,774
Maturity date							Feb. 01, 2017	Sep. 29, 2017	Feb. 01, 2015	Jul. 01, 2016		Jun. 01, 2017		Nov. 05, 2016						Jul. 30, 2035
Debt instrument, description of variable rate basis																							LIBOR	LIBOR
Debt instrument, basis spread on variable rate (in hundredths)	3.00%						4.50%	3.00%	3.25%	3.50%		3.85%											3.00%	3.00%
Number of business days prior to quarterly interest payments for resetting rates																				2 days
Debt instrument, interest rate during period (in hundredths)																				3.32%	3.51%	3.35%
Capitalized Interest [Abstract]
Capitalized interest		1,320	1,542	1,372
Deferred Financing Costs [Abstract]
Deferred costs, net of accumulated amortization		7,570	8,695
Accumulated amortization		7,070	4,841
Amortization of deferred costs		2,886	2,991	3,535
New Debt/Refinance and Payoffs [Abstract]
Company funded remaining tranche of the unsecured portion of the credit facility					50,000
Mortgage loan extinguishment						7,928	5,175		32,500	29,730		22,000
Mortgage loan							9,500	30,000	27,500	45,000		19,000		54,602
Advance in principal								5,000
Additional draw on mortgage loan, amount										5,000
Number of days between additional draw on mortgage loan										90 days
Fixed interest rate							5.433%	4.947%						6.50%
Mezzanine debt, principal														15,000
Unamortized deferred costs and defeasance premiums expensed		545	3,189	102			65	284	7			66	176	261	530										2,410
Unsecured Term Loan		$ 150,000	$ 100,000		$ 50,000
Number of mortgage loans paid off			7
Effective interest rate								4.10%	3.79%		4.32%	5.85%
Interest variable rate, floor								0.75%

XML

Investment In Hotel Properties (Wholly Owned Hotel Properties Acquired) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
Business Acquisition [Line Items]
Total Purchase Price	$ 267,974		$ 163,189
Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price	2,203		2,284
Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	63,016		39,854
Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	186,931		111,410
Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	15,824		9,641
Leasehold Liability [Member]
Business Acquisition [Line Items]
Total Purchase Price			(827)
Hyatt Union Square, New York, NY [Member]
Business Acquisition [Line Items]
Acquisition Date	Apr. 09, 2013	[1]
Total Purchase Price	123,945	[1]
Hyatt Union Square, New York, NY [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price	1,945	[1]
Hyatt Union Square, New York, NY [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	32,940	[1]
Hyatt Union Square, New York, NY [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	79,300	[1]
Hyatt Union Square, New York, NY [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	9,760	[1]
Courtyard By Marriott, San Deigo, CA [Member]
Business Acquisition [Line Items]
Acquisition Date	May 30, 2013
Total Purchase Price	71,184
Courtyard By Marriott, San Deigo, CA [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price	183
Courtyard By Marriott, San Deigo, CA [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	15,656
Courtyard By Marriott, San Deigo, CA [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	51,674
Courtyard By Marriott, San Deigo, CA [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	3,671
Residence Inn, Coconut Grove, FL [Member]
Business Acquisition [Line Items]
Acquisition Date	Jun. 12, 2013
Total Purchase Price	21,895
Residence Inn, Coconut Grove, FL [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price	75
Residence Inn, Coconut Grove, FL [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	4,146
Residence Inn, Coconut Grove, FL [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	17,456
Residence Inn, Coconut Grove, FL [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	218
Blue Moon, Miami Beach, FL [Member]
Business Acquisition [Line Items]
Acquisition Date	Dec. 20, 2013
Total Purchase Price	26,353
Blue Moon, Miami Beach, FL [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	4,874
Blue Moon, Miami Beach, FL [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	20,354
Blue Moon, Miami Beach, FL [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	1,125
Winter Haven, Miami Beach, FL [Member]
Business Acquisition [Line Items]
Acquisition Date	Dec. 20, 2013
Total Purchase Price	24,597
Winter Haven, Miami Beach, FL [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price	5,400
Winter Haven, Miami Beach, FL [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price	18,147
Winter Haven, Miami Beach, FL [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price	1,050
The Rittenhouse Hotel, Philadelphia, PA [Member]
Business Acquisition [Line Items]
Acquisition Date			Mar. 01, 2012
Total Purchase Price			42,460
The Rittenhouse Hotel, Philadelphia, PA [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price			2,156
The Rittenhouse Hotel, Philadelphia, PA [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price			7,119
The Rittenhouse Hotel, Philadelphia, PA [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price			29,605
The Rittenhouse Hotel, Philadelphia, PA [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price			3,580
The Rittenhouse Hotel, Philadelphia, PA [Member] | Leasehold Liability [Member]
Business Acquisition [Line Items]
Total Purchase Price			(827)
The Boxer, Boston, MA [Member]
Business Acquisition [Line Items]
Acquisition Date			May 07, 2012
Total Purchase Price			18,200
The Boxer, Boston, MA [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price			1,456
The Boxer, Boston, MA [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price			14,954
The Boxer, Boston, MA [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price			1,790
Holiday Inn Express, New York, NY [Member]
Business Acquisition [Line Items]
Acquisition Date			Jun. 18, 2012
Total Purchase Price			90,299
Holiday Inn Express, New York, NY [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price			98
Holiday Inn Express, New York, NY [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price			30,329
Holiday Inn Express, New York, NY [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price			57,016
Holiday Inn Express, New York, NY [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price			2,856
Courtyard By Marriot, Ewing, NJ [Member]
Business Acquisition [Line Items]
Acquisition Date			Aug. 13, 2012
Total Purchase Price			12,230
Courtyard By Marriot, Ewing, NJ [Member] | Franchise Fees Loan Costs And Leasehold Intangibles [Member]
Business Acquisition [Line Items]
Total Purchase Price			30
Courtyard By Marriot, Ewing, NJ [Member] | Land [Member]
Business Acquisition [Line Items]
Total Purchase Price			950
Courtyard By Marriot, Ewing, NJ [Member] | Building and Improvements [Member]
Business Acquisition [Line Items]
Total Purchase Price			9,835
Courtyard By Marriot, Ewing, NJ [Member] | Furniture, Fixtures And Equipment [Member]
Business Acquisition [Line Items]
Total Purchase Price			$ 1,415

[1] On April 9, 2013, we completed the acquisition of the Hyatt Union Square hotel in New York, NY from Risingsam Union Square LLC.  Consideration given in exchange for the property included $36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan of $55,000. We recognized a net gain of approximately $12,108 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Activities:
Net income	$ 49,948	$ 22,218	$ (26,968)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Gain on Acquisition of Hotel Assets, Net	(12,096)
Gain on Disposition of Hotel Assets	(32,121)	(11,231)	(991)
Impairment of Assets	10,314		30,165
Deferred Taxes	(5,500)	(3,355)
Depreciation	61,801	56,071	55,704
Amortization	2,545	3,680	3,739
Debt Extinguishment	471	2,261	145
Development Loan Interest Added to Principal		(678)	(2,094)
Equity in Loss of Unconsolidated Joint Ventures	1,835	2,124	(1,290)
Distributions from Unconsolidated Joint Ventures	568	1,387	132
Loss Recognized on Change in Fair Value of Derivative Instrument	22	658	125
Stock Based Compensation Expense	9,746	9,678	7,590
(Increase) Decrease in:
Hotel Accounts Receivable	2,419	(235)	(1,358)
Escrows	476	(1,944)	(4,378)
Other Assets	(4,269)	(2,683)	(914)
Due from Related Parties	(2,636)	(5,500)	(1,120)
Increase (Decrease) in:
Due to Related Parties	412	1,541	1,993
Accounts Payable, Accrued Expenses and Other Liabilities	6,326	(2,236)	(1,812)
Net Cash Provided by Operating Activities	90,261	71,756	58,668
Investing Activities:
Purchase of Hotel Property Assets	(217,142)	(67,637)	(167,149)
Deposits on Hotel Acquisitions, Net	(1,836)	(18,750)	(18,000)
Capital Expenditures	(42,854)	(28,443)	(26,201)
Cash Paid for Hotel Development Projects	(20,054)	(10,171)	(32,120)
Proceeds from Disposition of Hotel Properties and Investment in Unconsolidated Joint Venture	136,015	63,722	2,361
Net Changes in Capital Expenditure Escrows	(1,287)	(4,454)	(1,299)
Investment in Notes Receivable		(150)
Repayment of Notes Receivable		1,720	(1,570)
Proceeds from Insurance Claims	5,001
Repayment of Development Loans Receivable	15,122	8,000
Distributions from Unconsolidated Joint Venture	1,711	476
Cash paid for franchise fee intangible			(65)
Advances and Capital Contributions to Unconsolidated Joint Ventures	(150)	(130)	13,285
Net Cash Used in Investing Activities	(125,474)	(55,817)	(230,758)
Financing Activities:
Proceeds from (Repayments of) Borrowings Under Line of Credit, Net		(51,000)	5,000
Proceeds from Unsecured Term Loan Borrowing	50,000	100,000
Principal Repayment of Mortgages and Notes Payable	(54,398)	(187,478)	(8,193)
Proceeds from Mortgages and Notes Payable	65,000	98,695	71,278
Cash Paid for Deferred Financing Costs	(2,283)	(96)	(868)
Proceeds from Issuance of Preferred Stock, Net	72,370		110,977
Proceeds from Issuance of Common Stock, Net		128,558
Redemption of Preferred Stock	(60,000)
Redemption of Common Partnership Units	(1,000)
Settlement of Interest Rate Cap	(565)
Dividends Paid on Common Shares	(50,553)	(44,391)	(37,323)
Dividends Paid on Preferred Shares	(14,522)	(14,000)	(8,199)
Distributions Paid on Common Partnership Units	(1,682)	(1,736)	(1,610)
Net Cash Provided by Financing Activities	2,367	28,552	131,062
Net (Decrease) Increase in Cash and Cash Equivalents	(32,846)	44,491	(41,028)
Cash and Cash Equivalents - Beginning of Period	69,059	24,568	65,596
Cash and Cash Equivalents - End of Period	$ 36,213	$ 69,059	$ 24,568

XML

Debt, Continued (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended						12 Months Ended				12 Months Ended
	Apr. 24, 2013	Oct. 01, 2014	Dec. 31, 2013	Dec. 31, 2013 Scenario, Forecast [Member]	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Senior Unsecured Credit Agreement [Member]	Dec. 31, 2013 Unsecured Term Loan [Member]	Dec. 31, 2012 Unsecured Term Loan [Member]	Dec. 31, 2013 Secured Credit Facility [Member]	Dec. 31, 2013 Revolving Line Of Credit [Member]	Dec. 31, 2012 Revolving Line Of Credit [Member]	Dec. 31, 2011 Revolving Line Of Credit [Member]	Dec. 31, 2013 Revolving Line Of Credit [Member] Minimum [Member]	Dec. 31, 2013 Revolving Line Of Credit [Member] Maximum [Member]	Dec. 31, 2013 Financial Standby Letter of Credit [Member]	Dec. 31, 2013 Swing Line Loan [Member]
Revolving Line of Credit [Abstract]
Revolving line of credit, current borrowing capacity							$ 400,000	$ 150,000			$ 250,000
Revolving line of credit, maximum borrowing capacity							550,000			250,000						25,000	10,000
Line of credit, expiration date							Nov. 05, 2015
Renewal period of line of credit							1 year
Interest rate on loans provided under line of credit											The interest rate for the $400,000 unsecured credit facility is based on a pricing grid with a range of one month U.S. LIBOR plus 1.75% to 2.65%.
Description of variable rate basis											one month U.S. LIBOR
Fixed interest rate															3.217%
Basis spread on variable rate (in hundredths)	3.00%													1.75%	2.65%
Line of credit, financial covenant terms											The credit agreement providing for the $400,000 unsecured credit facility includes certain financial covenants and requires that we maintain: (1) a minimum tangible net worth of $1,000,000, which is calculated by adding back accumulated depreciation to the recorded value of our investment in hotel properties and subtracting certain intangible assets and debt and is subject to increases under certain circumstances; (2) annual distributions not to exceed 95% of adjusted funds from operations; and (3) certain financial ratios, including the following:· a fixed charge coverage ratio of not less than 1.45 to 1.00, which increases to 1.50 to 1.00 as of January 1, 2014;· a maximum leverage ratio of not more than 60%; and· a maximum secured debt leverage ratio of 55%, which decreased to 50% as of October 1, 2013 and further decreases to 45% as of October 1, 2014.The Company is in compliance with each of the covenants listed above as of December 31, 2013.
Line of credit facility covenant minimum tangible net worth			1,000,000
Line of credit facility covenant maximum annual distributions (in hundredths)			95.00%
Line of credit facility covenant fixed charge coverage ratio			1.45	1.50
Line of credit facility covenant maximum leverage ratio (in hundredths)			60.00%
Line of credit facility covenant maximum secured debt leverage ratio (in hundredths)		45.00%			50.00%	55.00%
Line of credit, remaining borrowing capacity											244,175
Line of credit, outstanding principal balance								150,000	100,000
Outstanding borrowings on revoloving line of credit			0
Interest Expense, on credit facilities											$ 5,413	$ 2,405	$ 2,103
Line of credit, weighted average interest rate (in hundredths)											3.08%	4.57%	4.43%

XML

Organization And Summary Of Significant Accounting Policies (Schedule Of Major Asset Depreciation) (Details)	12 Months Ended
	Dec. 31, 2013
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	7 years
Minimum [Member] | Building and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	7 years
Minimum [Member] | Furniture, Fixtures And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	2 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	40 years
Maximum [Member] | Building and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	40 years
Maximum [Member] | Furniture, Fixtures And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	7 years

XML

Investment In Unconsolidated Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2013

Investment In Unconsolidated Joint Ventures [Abstract]

Investment In Unconsolidated Joint Ventures

		Percent	Preferred		December 31,		December 31,
Joint Venture	Hotel Properties	Owned	Return		2013		2012
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50.0%	N/A	$	1,057	$	1,292
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50.0%	N/A		4,777		4,964
Mystic Partners, LLC	Hilton and Marriott branded hotels in CT	8.8%-66.7%	8.5% non-cumulative		6,210		9,751
				$	12,044	$	16,007

Income Or Loss From Unconsolidated Joint Ventures

	Year Ended December 31,
		2013		2012		2011
SB Partners, LLC	$	264	$	85	$	(171)
Hiren Boston, LLC		113		230		158
Mystic Partners, LLC		(399)		(433)		(364)
Inn American Hospitality at Ewing LLC		-		-		(28)
Metro 29th Street Associates, LLC		-		(114)		615
(Loss) Income from Unconsolidated Joint Venture Investments		(22)		(232)		210
Impairment from Unconsolidated Joint Ventures		(1,813)		-		(1,677)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Ventures		-		(1,892)		2,757
(Loss) Income from Unconsolidated Joint Venture Investments	$	(1,835)	$	(2,124)	$	1,290

Summary Financial Information Related To Unconsolidated Joint Ventures

Balance Sheets
		December 31,		December 31,
		2013		2012
Assets
Investment in Hotel Properties, Net	$	114,221	$	118,506
Other Assets		19,146		20,709
Assets Held For Sale		-		5,875
Total Assets	$	133,367	$	145,090
Liabilities and Equity
Mortgages and Notes Payable	$	112,654	$	119,236
Other Liabilities		37,464		36,292
Liabilities Related to Assets Held For Sale		-		6,071
Equity:
Hersha Hospitality Trust		26,230		28,581
Joint Venture Partner(s)		(42,981)		(45,090)
Total Equity		(16,751)		(16,509)
Total Liabilities and Equity	$	133,367	$	145,090

Statements of Operations
	Year Ended December 31,
		2013		2012		2011
Room Revenue	$	58,273	$	62,058	$	63,896
Other Revenue		22,606		22,306		21,945
Operating Expenses		(55,179)		(57,131)		(56,607)
Interest Expense		(7,526)		(7,650)		(7,272)
Lease Expense		(996)		(3,729)		(5,505)
Property Taxes and Insurance		(3,034)		(3,438)		(4,280)
General and Administrative		(5,794)		(5,904)		(5,680)
Depreciation and Amortization		(6,697)		(6,533)		(6,034)
Loss Allocated to Noncontrolling Interests		(179)		(2,614)		(44)
Net Income from Continuing Operations		1,474		(2,635)		419
(Loss) Income from Discontinued Operations		(55)		121		1,503
Gain on Disposition of Hotel Properties		1,161		25,131		-
Net Income	$	2,580	$	22,617	$	1,922

Reconciliation Of Share In Unconsolidated Joint Ventures' Equity In Investment In Unconsolidated Joint Ventures

		December 31,		December 31,
		2013		2012
Company's share of equity recorded on the joint ventures' financial statements	$	26,230	$	28,581
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)		(14,186)		(12,574)
Investment in Unconsolidated Joint Ventures	$	12,044	$	16,007

(1)  Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:

· cumulative impairment of the Company’s investment in joint ventures not reflected on the joint ventures' financial statements;

· the Company’s basis in the investment in joint ventures not recorded on the joint ventures' financial statements; and

accumulated amortization of the Company’s equity in joint ventures that reflects the Company’s portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures financial statements (this excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on the Company’s consolidated statement of operations).

XML

Investment In Hotel Properties (Tables)

12 Months Ended

Dec. 31, 2013

Investment In Hotel Properties [Abstract]

Investment In Hotel Properties

		December 31, 2013		December 31, 2012
Land	$	339,027	$	305,286
Buildings and Improvements		1,222,639		1,214,865
Furniture, Fixtures and Equipment		171,116		171,892
Construction in Progress		63,168		40,572
		1,795,950		1,732,615
Less Accumulated Depreciation		(260,115)		(265,902)
Total Investment in Hotel Properties	$	1,535,835	$	1,466,713

Wholly Owned Hotel Properties Acquired

During the year ended December 31, 2013, we acquired the following wholly-owned hotel properties:

Hotel	Acquisition Date		Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Total Purchase Price
Hyatt Union Square, New York, NY*	4/9/2013	$	32,940	$	79,300	$	9,760	$	1,945	$	123,945
Courtyard by Marriott, San Diego, CA	5/30/2013		15,656		51,674		3,671		183		71,184
Residence Inn,    Coconut Grove, FL	6/12/2013		4,146		17,456		218		75		21,895
Blue Moon, Miami Beach, FL	12/20/2013		4,874		20,354		1,125		-		26,353
Winter Haven, Miami Beach, FL	12/20/2013		5,400		18,147		1,050		-		24,597
Total		$	63,016	$	186,931	$	15,824	$	2,203	$	267,974

*On April 9, 2013, we completed the acquisition of the Hyatt Union Square hotel in New York, NY from Risingsam Union Square LLC.  Consideration given in exchange for the property included $36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan of $55,000.  We recognized a net gain of approximately $12,108 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

During the year ended December 31, 2012, we acquired the following wholly-owned hotel and hotel development properties:

Hotel	Acquisition Date	Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Leasehold Liability		Total Purchase Price
The Rittenhouse Hotel,      Philadelphia, PA	3/1/2012	$	7,119	$	29,605	$	3,580	$	2,156	$	(827)	$	42,460
The Boxer, Boston, MA	5/7/2012		1,456		14,954		1,790		-		-		18,200
Holiday Inn Express, New York, NY	6/18/2012		30,329		57,016		2,856		98		-		90,299
Courtyard by Marriot, Ewing, NJ	8/13/2012		950		9,835		1,415		30		-		12,230
Total		$	39,854	$	111,410	$	9,641	$	2,284	$	(827)	$	163,189

Results Of Operations For Hotels Acquired With 100% Interest

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2013 are total revenues of $22,889 and a total net income of $1,412 for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition:

	Year Ended December 31,
	2013
Hotel		Revenue		Net (Loss) Income
Hyatt Union Square, New York, NY	$	11,272	$	(1,466)
Courtyard by Marriott, San Diego, CA		8,350		1,914
Residence Inn, Coconut Grove, FL		2,889		713
Blue Moon, Miami Beach, FL		175		111
Winter Haven, Miami Beach, FL		203		140
Total	$	22,889	$	1,412

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2012 are total revenues of $31,393 and total net income of $1,085 for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition: 

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

	2013				2012
Hotel	Revenue		Net (Loss) Income		Revenue		Net (Loss) Income
The Rittenhouse Hotel, Philadelphia, PA	$	17,395	$	(2,827)	$	16,812	$	(1,834)
The Boxer, Boston, MA		3,799		(241)		2,791		574
Holiday Inn Express, New York, NY		16,746		1,541		10,170		2,142
Courtyard by Marriot, Ewing, NJ		4,210		875		1,620		203
Total	$	42,150	$	(652)	$	31,393	$	1,085

Condensed Pro Forma Financial Data

	Year Ended December 31,
	2013		2012
Pro Forma Total Revenues	$	353,407	$	331,587
Pro Forma Income from Continuing Operations	$	22,651	$	7,408
(Loss) Income from Discontinued Operations		29,195		14,720
Pro Forma Net Income		51,846		22,128
Loss Allocated to Noncontrolling Interest		271		(154)
Preferred Distributions		(14,611)		(14,000)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares		(2,250)		-
Pro Forma Net (Loss) Income Applicable to Common Shareholders	$	35,256	$	7,974
Pro Forma Income Applicable to Common Shareholders per Common Share
Basic	$	0.18	$	0.04
Diluted	$	0.18	$	0.04
Weighted Average Common Shares Outstanding
Basic		198,390,450		187,415,270
Diluted		201,918,177		187,415,270

Schedule Of Capitalized Expenditures Related To Hotel Development Projects And Renovations

	Year Ended December 31,
	2013		2012		2011
Property Tax	$	388	$	296	$	218
Interest Expense		1,318		1,542		1,372
Utility		3		9		201
Total	$	1,709	$	1,847	$	1,791

XML

Development Loans Receivable (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Development Loans Receivable [Abstract]
Interest income from development loans	$ 158	$ 1,998	$ 3,427
Accrued interest on development loans receivable	$ 0	$ 348

XML

Organization And Summary Of Significant Accounting Policies (Schedule Of Preferred Stock) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Class of Stock [Line Items]
Shares Outstanding	7,600,000	7,000,000
Series A Preferred Shares [Member]
Class of Stock [Line Items]
Shares Outstanding		2,400,000
Aggregate Liquidation Preference	$ 60,000
Distribution Rate	8.00%
Dividend Per Share	$ 0.5000	$ 2.0000	$ 2.0000
Series B Preferred Shares [Member]
Class of Stock [Line Items]
Shares Outstanding	4,600,000	4,600,000
Aggregate Liquidation Preference	115,000
Distribution Rate	8.00%
Dividend Per Share	$ 2.0000	$ 2.0000	$ 1.2400
Series C Preferred Shares [Member]
Class of Stock [Line Items]
Shares Outstanding	3,000,000
Aggregate Liquidation Preference	$ 75,000
Distribution Rate	6.875%
Dividend Per Share	$ 1.4753

XML

Development Loans Receivable (Tables)

12 Months Ended

Dec. 31, 2013

Development Loans Receivable [Abstract]

Development Loans Receivable

Hotel Property	Borrower		Principal Outstanding December 31, 2013		Principal Outstanding December 31, 2012	Interest Rate		Maturity Date
Operational Hotels
Hyatt 48Lex - New York, NY*	44 Lexington Holding, LLC	$	-	$	15,122	9%	(1)	N/A
Construction Hotels
Hyatt Union Square - New York, NY (2)	Risingsam Union Square, LLC		-		13,303	10%		N/A
Total Development Loans Receivable		$	-	$	28,425

*Indicates borrower is a related party

(1)Prior to June 1, 2012, the development loan to 44 Lexington Holding LLC allowed the borrower to elect, quarterly, to pay accrued interest in-kind by adding the accrued interest to the principal balance of the loan.  Effective June 1, 2012, we amended the development loan with 44 Lexington Holding LLC to cease the buyer’s election to pay accrued interest in-kind.  Interest of $678 was added to principal during the year ended December 31, 2012.

(2)On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY from Risingsam Union Square, LLC.  Consideration given in exchange for the property including $36,000 paid in cash to the seller and our cancellationof a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan.  See “Note 2 –Investment In Hotel Properties” for additional discussion of this transaction.

Advances And Repayments On Development Loans Receivable

	2013	2012	2011
Balance at January 1,	$          28,425	$          35,747	$           41,653
Interest added to principal	-	678	2,094
Repayments	(15,122)	(8,000)	-
Principal exchanged for interest in hotel properties	(13,303)	-	(8,000)
Balance at December 31,	$                     -	$          28,425	$           35,747

XML

Other Assets And Deposits On Hotel Acquisitions (Tables)

12 Months Ended

Dec. 31, 2013

Other Assets And Deposits On Hotel Acquisitions [Abstract]

Other Assets

	December 31, 2013		December 31, 2012
Transaction Costs	$	115	$	339
Acquisition of Hyatt Union Square		-		3,120
Investment in Statutory Trusts		1,548		1,548
Prepaid Expenses		9,256		8,654
Insurance Claims Receivable		1,706		3,883
Deferred Tax Asset, Net of Valuation Allowance of $804		8,766		3,355
Other		6,069		4,615
	$	27,460	$	25,514

XML

Consolidated Statements Of Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Dividends and Distributions declared:
Common Stock, Dividends declared (in dollars per share)	$ 0.24	$ 0.24	$ 0.23
Common Units, Distributions declared (in dollars per share)	$ 0.24	$ 0.24	$ 0.23

XML

Debt (Tables)

12 Months Ended

Dec. 31, 2013

Debt [Abstract]

Aggregate Annual Principal Payments For Mortgages And Notes Payable

Year Ending December 31,	Amount
2014	$	17,500
2015		250,188
2016		302,648
2017		181,184
2018		13,802
Thereafter		51,548
Net Unamortized Premium		2,466
	$	819,336

XML

Income Taxes (Components Of Consolidated TRS's Deferred Tax Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Net operating loss carryforward	$ 8,605	$ 4,234
Accrued expenses and other	685	(75)
Tax credit carryforwards	280
Net deferred tax assets	9,570	4,159
Valuation allowance	(804)	(804)
Deferred tax assets	$ 8,766	$ 3,355

XML

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Selected Quarterly Financial Data (Unaudited)

	Year Ended December 31, 2013
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	65,878	$	91,068	$	90,741	$	92,510
Total Expenses		73,174		71,703		87,512		90,820
(Loss) Income from Unconsolidated Joint Ventures		(396)		148		227		(1,814)
(Loss) Income from Continuing Operations		(7,692)		19,513		3,456		(124)
Income Tax Benefit		1,129		(1,222)		2,375		3,318
Income (Loss) from Discontinued Operations (including Gain on Disposition of Hotel Properties)		(1,113)		(206)		(3,532)		34,046
Net (Loss) Income		(7,676)		18,085		2,299		37,240
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(673)		210		(164)		962
Issuance Costs of Redeemed Preferred Stock		2,250		-		-		-
Preferred Distributions		3,844		3,589		3,589		3,589
Net (Loss) Income applicable to Common Shareholders	$	(13,097)	$	14,286	$	(1,126)	$	32,689
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.07)	$	0.08	$	0.01	$	0.00
Discontinued Operations		-		(0.01)		(0.02)		0.16
Net (Loss) Income applicable to Common Shareholders	$	(0.07)	$	0.07	$	(0.01)	$	0.16
Weighted Average Common Shares Outstanding
Basic		197,029,017		198,633,051		198,878,496		198,994,277
Diluted		197,029,017		201,201,337		201,644,633		198,994,277
	Year Ended December 31, 2012
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	56,069	$	81,361	$	82,355	$	82,741
Total Expenses		65,623		73,097		77,480		80,059
(Loss) Income from Unconsolidated Joint Ventures		(730)		190		(1,431)		(153)
(Loss) Income from Continuing Operations		(10,284)		8,454		3,444		2,529
Income Tax Benefit		-		-		-		3,355
(Loss) Income from Discontinued Operations (including Gain on Disposition of Hotel Properties)		2,370		8,935		2,450		965
Net (Loss) Income		(7,914)		17,389		5,894		6,849
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(741)		796		(279)		66
Preferred Distributions		3,500		3,500		3,500		3,500
Net (Loss) Income applicable to Common Shareholders	$	(10,673)	$	13,093	$	2,673	$	3,283
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.09)	$	0.03	$	0.00	$	0.01
Discontinued Operations		0.03		0.04		0.01		0.01
Net Loss (Income) applicable to Common Shareholders	$	(0.06)	$	0.07	$	0.01	$	0.02
Weighted Average Common Shares Outstanding
Basic		170,427,428		186,264,437		196,360,325		196,411,729
Diluted		170,427,428		189,011,990		196,360,325		199,593,648

XML

Investment In Unconsolidated Joint Ventures (Income Or Loss From Unconsolidated Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures									$ (22)	$ (232)	$ 210
Loss from Remeasurement of Investment in Unconsolidated Joint Venture										(1,892)	2,757
Impairment from Unconsolidated Joint Ventures									(1,813)		(1,677)
(Loss) Income from Unconsolidated Joint Venture Investments	(1,814)	227	148	(396)	(153)	(1,431)	190	(730)	(1,835)	(2,124)	1,290
SB Partners, LLC [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures									264	85	(171)
Hiren Boston, LLC [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures									113	230	158
Mystic Partners, LLC [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures									(399)	(433)	(364)
Inn American Hospitality at Ewing, LLC [Member
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures											(28)
Metro 29th Street Associates, LLC [Member]
Investments in Unconsolidated Joint Ventures [Line Items]
Income (Loss) from Unconsolidated Joint Ventures										$ (114)	$ 615

XML

Earnings Per Share (Reconciliation Of Earnings Per Share) (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
BASIC AND DILUTED [Abstract]
Income from Continuing Operations	$ (124,000)	$ 3,456,000	$ 19,513,000	$ (7,692,000)	$ 2,529,000	$ 3,444,000	$ 8,454,000	$ (10,284,000)	$ 20,753,000		$ 7,498,000		$ 100,000
Loss from Continuing Operations allocated to Noncontrolling Interests									658,000		703,000		658,000
Distributions to Preferred Shareholders	(3,589,000)	(3,589,000)	(3,589,000)	(3,844,000)	(3,500,000)	(3,500,000)	(3,500,000)	(3,500,000)	(14,611,000)		(14,000,000)		(10,499,000)
Dividends Paid on Unvested Restricted Shares									(804,000)		(459,000)		(229,000)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Stock				(2,250,000)					(2,250,000)
Income (Loss) from Continuing Operations attributable to Common Shareholders									3,746,000		(6,258,000)		(9,970,000)
Discontinued Operations [Abstract]
(Loss) Income from Discontinued Operations	34,046,000	(3,532,000)	(206,000)	(1,113,000)	965,000	2,450,000	8,935,000	2,370,000	29,195,000		14,720,000		(27,068,000)
Loss (Income) from Discontinued Operations allocated to Noncontrolling Interests									(993,000)		(545,000)		1,076,000
(Loss) Income from Discontinued Operations attributable to Common Shareholders									28,202,000		14,175,000		(25,992,000)
Net (Loss) Income attributable to Common Shareholders									$ 31,948,000		$ 7,917,000		$ (35,962,000)
Denominator [Abstract]
Weighted average number of common shares - basic (in shares)	198,994,277	198,878,496	198,633,051	197,029,017	196,411,729	196,360,325	186,264,437	170,427,428	198,390,450		187,415,270		168,753,382
Effect of dilutive securities [Abstract]
Restricted Stock Awards (in shares)									2,384,165
Contingently Issued Shares (in shares)									1,143,562
Weighted average number of common shares - diluted (in shares)	198,994,277	201,644,633	201,201,337	197,029,017	199,593,648	196,360,325	189,011,990	170,427,428	201,918,177	[1]	187,415,270	[1]	168,753,382	[1]

[1] Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets of $85,759 and $86,657	$ 1,535,835	$ 1,466,713
Investment in Unconsolidated Joint Ventures	12,044	16,007
Development Loans Receivable		28,425
Cash and Cash Equivalents	36,213	69,059
Escrow Deposits	25,938	26,792
Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of $43 and $365	9,141	11,538
Deferred Financing Costs, Net of Accumulated Amortization of $7,070 and $4,841	7,570	8,695
Due from Related Parties	11,124	8,488
Intangible Assets, Net of Accumulated Amortization of $3,227 and $2,413	7,603	8,698
Deposits on Hotel Acquisitions	18,586	37,750
Other Assets	27,460	25,514
Hotel Assets Held for Sale	56,583
Total Assets	1,748,097	1,707,679
Liabilities and Equity:
Line of Credit	0
Unsecured Term Loan	150,000	100,000
Unsecured Notes Payable	51,548	51,548
Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt of $55,714 and $57,256	571,953	641,160
Accounts Payable, Accrued Expenses and Other Liabilities	40,852	33,838
Dividends and Distributions Payable	15,955	15,621
Due to Related Parties	4,815	4,403
Liabilities Related To Hotel Assets Held for Sale	45,835
Total Liabilities	880,958	846,570
Redeemable Noncontrolling Interests - Common Units (Note 1)		15,321
Shareholders' Equity:
Preferred Shares: $.01 Par Value, 29,000,000 shares Authorized, 7,600,000 Series B and C Shares Issued and Outstanding at December 31, 2013 and 7,000,000 Series A and B Preferred Shares Issued and Outstanding at December 31, 2012, with Liquidation Preferences of $25 Per Share (Note 1)	76	70
Accumulated Other Comprehensive Loss	(376)	(1,786)
Additional Paid-in Capital	1,200,798	1,178,292
Distributions in Excess of Net Income	(364,568)	(348,734)
Total Shareholders' Equity	837,958	829,828
Noncontrolling Interests (Note 1):
Noncontrolling Interests - Common Units	29,523	15,484
Noncontrolling Interest - Consolidated Variable Interest Entity	(342)	476
Total Noncontrolling Interests	29,181	15,960
Total Equity	867,139	845,788
Total Liabilities and Equity	1,748,097	1,707,679
Class A Common Shares [Member]
Shareholders' Equity:
Common Shares	$ 2,028	$ 1,986

XML

Investment In Hotel Properties (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended				0 Months Ended	12 Months Ended		0 Months Ended		12 Months Ended	1 Months Ended	12 Months Ended			0 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Hurricane Sandy [Member]	Apr. 09, 2013 Hyatt Union Square, New York, NY [Member]	Dec. 31, 2013 Hyatt Union Square, New York, NY [Member]		Jul. 22, 2011 32 Pearl Street, New York, NY [Member]	Aug. 13, 2012 Courtyard By Marriot, Ewing, NJ [Member]	Dec. 31, 2012 Courtyard By Marriot, Ewing, NJ [Member]	Jun. 18, 2012 Holiday Inn Express, New York, NY [Member]	Dec. 31, 2013 Holiday Inn Express, New York, NY [Member]	Dec. 31, 2012 Holiday Inn Express, New York, NY [Member]	Dec. 31, 2013 Hampton Inn, Pearl Street, New York, NY [Member]	Oct. 16, 2013 Hotel Oceana, Santa Barbara, California [Member]	Dec. 31, 2013 Hotel 373, Fifth Avenue, NY [Member] Subsequent Event [Member]	Dec. 18, 2013 Non-core Hotel Properties [Member] property	Sep. 20, 2013 Non-core Hotel Properties [Member] property	May 08, 2012 Non-core Hotel Properties [Member] property	Aug. 15, 2011 Non-core Hotel Properties [Member] property
Acquisitions [Abstract]
Depreciation expense	$ 61,500	$ 55,956	$ 55,336
Acquisition costs	855
Development loan, principal amount					10,000
Business acquisition, cancellation of accrued interest receivable					3,303
Mortgage loan					55,000
Gain on hotel acquisition					12,108
Percentage of interest acquired									50.00%		50.00%
Cash acquired											10,000
Accrued interest payable forgiven											800
Investment in hotel properties	1,535,835	1,466,713									90,201
Aggregate mortgage and mezzanine debt assumed									12,875		73,038
Premium recorded on mortgage and mezzanine debt assumed											3,436
Mezzanine debt repaid											15,000
Asset Development and Renovation [Abstract]
Acquisition Date						Apr. 09, 2013	[1]	Jul. 22, 2011		Aug. 13, 2012			Jun. 18, 2012
Business acquisition, cash paid					36,000			28,300							42,000
Estimated impairment charge												1,586		1,997
Corresponding insurance claim												1,486		1,897
Estimated receiveable from the property insurance claim	6,546
Property insurance received	5,001			4,840
Purchase And Sale Agreement [Abstract]
Number of Real Estate Properties																	12	16	4	18
Mortgage debt assumed															25,250
Purchase and sales agreement, Purchase price																$ 37,000

[1] On April 9, 2013, we completed the acquisition of the Hyatt Union Square hotel in New York, NY from Risingsam Union Square LLC.  Consideration given in exchange for the property included $36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan of $55,000. We recognized a net gain of approximately $12,108 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

XML

Consolidated Statements Of Comprehensive (Loss) Income (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Consolidated Statements Of Comprehensive (Loss) Income [Abstract]
Net Income (Loss)	$ 49,948,000	$ 22,218,000	$ (26,968,000)
Other Comprehensive Income (Loss)
Change in Fair Value of Derivative Instruments	2,694,000	1,073,000	(367,000)
Less: Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income	(1,284,000)	(1,708,000)	(446,000)
Comprehensive Income (Loss)	51,358,000	21,583,000	(27,781,000)
Less: Comprehensive (Income) Loss Attributable to Noncontrolling Interests	(335,000)	158,000	1,734,000
Less: Preferred Distributions	(14,611,000)	(14,000,000)	(10,499,000)
Less: Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares	(2,250,000)
Comprehensive Income (Loss) Attributable to Common Shareholders	$ 34,162,000	$ 7,741,000	$ (36,546,000)

XML

Other Assets And Deposits On Hotel Acquisitions (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended		0 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Apr. 09, 2013 Hyatt Union Square, New York, NY [Member]	Dec. 31, 2012 Hyatt Union Square, New York, NY [Member]	Dec. 31, 2013 Hilton Garden Inn - 52nd St NY [Member]	Dec. 31, 2012 Hilton Garden Inn - 52nd St NY [Member]	Oct. 24, 2012 Hilton Garden Inn - 52nd St NY [Member]
Receivables, Loans, Notes Receivable, and Others, Schedule of Accounts, Notes, Loans and Financing Receivable [Line Items]
Acquisition Date			Apr. 09, 2013
Deferred Tax Asset	$ 8,766	$ 3,355
Interest bearing deposits related to acquisition of other hotel properties		1,750			15,486	15,000	17,000
Non-interest bearing deposits related to the acquisition of hotel properties				21,000
Business Combination, Consideration Transferred	267,974	163,189				74,000
Interest bearing deposit (in hundredths)					10.00%
Additional deposit for interest bearing deposit to acquire hotel property					1,514
Business acquisition, consideration, cash paid					15,000
Business acquisition, mortgage debt assumed, principal balance					$ 42,000

XML

Share Based Payments (Tables)

12 Months Ended

Dec. 31, 2013

Summary Of Unvested Share Awards Issued To Nonemployees

						Shares Vested			Unearned Compensation
	Shares		Share Price on	Vesting	Vesting	December 31,	December 31,		December 31,		December 31,
Original Issuance Date	Issued		date of grant	Period	Schedule	2013	2012		2013		2012
February 1, 2013	30,000	$	5.41	2 years	50%/year	14,999	-	$	81	$	-
March 26, 2012	28,500	$	5.45	2 years	50%/year	28,500	15,000		-		74
Total	58,500					43,499	15,000	$	81	$	74

2010, 2011 and 2012 Annual LTIP [Member]

Summary Of Unvested Share Awards Issued To Executives

						Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
March 20, 2013
(2012 Annual LTIP)	779,045	$	5.95	3 years	25%/year (1)	389,520	-	$	1,039	$	-
March 26, 2012
(2011 Annual LTIP)	748,927	$	5.45	3 years	25%/year (1)	561,694	374,462		266		892
March 30, 2011
(2010 Annual LTIP)	440,669	$	5.98	3 years	25%/year (1)	440,669	330,500		-		180
						1,391,883	704,962	$	1,305	$	1,072

(1)25% of the issued shares vested immediately upon issuance.  In general, the remaining shares vest 25% on the first through third anniversaries of the date of issuance (subject to continuous employment through the applicable vesting date).

Restricted Share Awards [Member]

Summary Of Unvested Share Awards Issued To Executives

						Shares Vested			Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
June 1, 2009	744,128	$	2.80	4 years	25%/year	744,128	558,305	$	-	$	217
June 1, 2010	182,308		4.63	2-3 years	25-50%/year	182,308	139,522		-		82
June 30, 2011	17,692		5.57	2-4 years	25-50%/year	9,919	4,958		28		51
April 18, 2012	1,035,595		5.47	5 years	33% Year 3, 4, 5 (1)	-	-		3,746		4,842
June 29, 2012	52,703		5.28	2-4 years	25-50%/year	22,480	-		110		228
June 28, 2013	48,600		5.64	2-4 years	25-50%/year	-	-		199		-
September 20, 2013	4,605		5.52	2-4 years	25-50%/year	-	-		19		-
Total	2,085,631					958,835	702,785	$	4,102	$	5,420

(1)On April 18, 2012, the Company entered into amended and restated employment agreements with the Company’s executive officers.  To induce the executives to agree to the substantial reduction in benefits upon certain terminations following a change of control as described in the agreements, the Company awarded an aggregate of 1,035,595 restricted common shares to the executives pursuant to the 2012 Plan.  None of these restricted common shares will vest prior to the third anniversary of the date of issuance.  Thereafter, 33.3% of each award of restricted common shares will vest on each of the third, fourth and fifth anniversaries of the date of issuance.  Vesting will accelerate upon a change of control or if the relevant executive’s employment with the Company were to terminate for any reason other than for cause (as defined in the agreements).

Annual Retainer [Member]

Summary Of Unvested Share Awards Issued To Trustees

						Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule		December 31, 2013		December 31, 2012
December 27, 2013	39,133	$	5.63	1 year	100%	$	220	$	-
December 28, 2012	32,417		4.93	1 year	100%		-		160
Total	71,550					$	220	$	160

Multi-year LTIP Trustee [Member]

Summary Of Unvested Share Awards Issued To Trustees

				Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
December 27, 2013	12,000	3 years	33%/year	-	-	$	67	$	-
December 28, 2012	12,000	3 years	33%/year	4,002	-		39		59
June 5, 2012	10,800	3 years	33%/year	7,200	3,600		18		36
March 30, 2011	10,800	3 years	33%/year	10,800	7,800		-		18
				22,002	11,400	$	124	$	113

XML

Commitments And Contingencies And Related Party Transactions (Future Minimum Lease Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Commitments And Contingencies And Related Party Transactions [Abstract]
2014	$ 735
2015	735
2016	735
2017	735
2018	735
Thereafter	60,930
Future minimum lease payments	$ 64,605

XML

Shareholders' Equity And Noncontrolling Interests In Partnership

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

Shareholders' Equity And Noncontrolling Interests In Partnership

NOTE 13 – SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS IN PARTNERSHIP

Common Shares

The Company’s outstanding common shares have been duly authorized, and are fully paid and non-assessable. Common shareholders are entitled to receive dividends if and when authorized and declared by the Board of Trustees of the Company out of assets legally available and to share ratably in the assets of the Company legally available for distribution to its shareholders in the event of its liquidation, dissolution or winding up after payment of, or adequate provision for, all known debts and liabilities of the Company.

Preferred Shares

The Declaration of Trust authorizes our Board of Trustees to classify any unissued preferred shares and to reclassify any previously classified but unissued preferred shares of any series from time to time in one or more series, as authorized by the Board of Trustees. Prior to issuance of shares of each series, the Board of Trustees is required by Maryland REIT Law and our Declaration of Trust to set for each such series, subject to the provisions of our Declaration of Trust regarding the restriction on transfer of shares of beneficial interest, the terms, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such series. Thus, our Board of Trustees could authorize the issuance of additional preferred shares with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control in us that might involve a premium price for holders of common shares or otherwise be in their best interest.

Common Units

Common Units are issued in connection with the acquisition of wholly owned hotels and joint venture interests in hotel properties. The total number of Common Units outstanding as of December 31, 2013, 2012 and 2011 was 6,914,716,  7,112,506 and 7,270,316, respectively. These units can be redeemed for cash or converted to common shares, at the Company’s option, on a one-for-one basis. The number of common shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidation or similar pro rata share transactions, that otherwise would have the effect of diluting the ownership interest of the limited partners or our shareholders. During 2013, 2012 and 2011, 27,790,  157,810 and 195,000 Common Units were converted to common shares, respectively. The Company redeemed 170,000 Common Units as part of the acquisition of the Hyatt Union Square, New York, NY during 2013.

XML

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Reconciliation Of Earnings Per Share

	Year Ended December 31,
		2013		2012			2011
NUMERATOR:
Basic and Diluted*
Income from Continuing Operations	$	20,753	$	7,498		$	100
Income from Continuing Operations allocated to Noncontrolling Interests		658		703			658
Distributions to Preferred Shareholders		(14,611)		(14,000)			(10,499)
Dividends Paid on Unvested Restricted Shares		(804)		(459)			(229)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Stock		(2,250)		-			-
Income (Loss) from Continuing Operations attributable to Common Shareholders		3,746		(6,258)			(9,970)
Discontinued Operations
Income (Loss) from Discontinued Operations		29,195		14,720			(27,068)
(Income) Loss from Discontinued Operations allocated to Noncontrolling Interests		(993)		(545)			1,076
Income (Loss) from Discontinued Operations attributable to Common Shareholders		28,202		14,175			(25,992)
Net Income (Loss) attributable to Common Shareholders	$	31,948	$	7,917		$	(35,962)
DENOMINATOR:
Weighted average number of common shares - basic		198,390,450		187,415,270			168,753,382
Effect of dilutive securities:
Restricted Stock Awards		2,384,165		-	*		-
Contingently Issued Shares		1,143,562		-	*		-
Weighted average number of common shares - diluted		201,918,177		187,415,270			168,753,382

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

Potentially Dilutive Shares Excluded From The Denominator For The Purpose Of Computing Diluted Earnings Per Share

	Year Ended December 31,
	2013	2012	2011
Common Units of Limited Partnership Interest	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding	-	433,097	584,216
Contingently Issuable Share Awards	-	2,778,545	2,097,456
Options to Acquire Common Shares Outstanding	-	275,580	2,360,156
Total potentially dilutive securities excluded from the denominator	6,968,035	10,695,345	12,336,940

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Selected Quarterly Financial Data (Unaudited)

NOTE 15 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	Year Ended December 31, 2013
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	65,878	$	91,068	$	90,741	$	92,510
Total Expenses		73,174		71,703		87,512		90,820
(Loss) Income from Unconsolidated Joint Ventures		(396)		148		227		(1,814)
(Loss) Income from Continuing Operations		(7,692)		19,513		3,456		(124)
Income Tax Benefit		1,129		(1,222)		2,375		3,318
Income (Loss) from Discontinued Operations (including Gain on Disposition of Hotel Properties)		(1,113)		(206)		(3,532)		34,046
Net (Loss) Income		(7,676)		18,085		2,299		37,240
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(673)		210		(164)		962
Issuance Costs of Redeemed Preferred Stock		2,250		-		-		-
Preferred Distributions		3,844		3,589		3,589		3,589
Net (Loss) Income applicable to Common Shareholders	$	(13,097)	$	14,286	$	(1,126)	$	32,689
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.07)	$	0.08	$	0.01	$	0.00
Discontinued Operations		-		(0.01)		(0.02)		0.16
Net (Loss) Income applicable to Common Shareholders	$	(0.07)	$	0.07	$	(0.01)	$	0.16
Weighted Average Common Shares Outstanding
Basic		197,029,017		198,633,051		198,878,496		198,994,277
Diluted		197,029,017		201,201,337		201,644,633		198,994,277
	Year Ended December 31, 2012
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total Revenues	$	56,069	$	81,361	$	82,355	$	82,741
Total Expenses		65,623		73,097		77,480		80,059
(Loss) Income from Unconsolidated Joint Ventures		(730)		190		(1,431)		(153)
(Loss) Income from Continuing Operations		(10,284)		8,454		3,444		2,529
Income Tax Benefit		-		-		-		3,355
(Loss) Income from Discontinued Operations (including Gain on Disposition of Hotel Properties)		2,370		8,935		2,450		965
Net (Loss) Income		(7,914)		17,389		5,894		6,849
(Loss) Income Allocated to Noncontrolling Interests in Continuing Operations		(741)		796		(279)		66
Preferred Distributions		3,500		3,500		3,500		3,500
Net (Loss) Income applicable to Common Shareholders	$	(10,673)	$	13,093	$	2,673	$	3,283
Basic and diluted earnings per share:
(Loss) Income from continuing operations applicable to common shareholders	$	(0.09)	$	0.03	$	0.00	$	0.01
Discontinued Operations		0.03		0.04		0.01		0.01
Net Loss (Income) applicable to Common Shareholders	$	(0.06)	$	0.07	$	0.01	$	0.02
Weighted Average Common Shares Outstanding
Basic		170,427,428		186,264,437		196,360,325		196,411,729
Diluted		170,427,428		189,011,990		196,360,325		199,593,648

In the second quarter of 2012, we recorded an adjustment impacting gain on disposition of hotel properties that increased net income by $1,950. This adjustment was made after completing an analysis that determined a liability for deferred land rent payable was not properly written off when a hotel property was sold during the first quarter of 2012. After evaluating the quantitative and qualitative effects of this adjustment, we have concluded that the impact on the Company’s first quarter and second quarter consolidated financial statements was not material.

XML

Share Based Payments (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended															12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended			12 Months Ended		12 Months Ended								12 Months Ended		12 Months Ended		12 Months Ended	0 Months Ended		12 Months Ended								12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 2013 Annual LTIP [Member]	Dec. 31, 2013 2010, 2011 and 2012 Annual LTIP [Member]	Dec. 31, 2012 2010, 2011 and 2012 Annual LTIP [Member]	Dec. 31, 2011 2010, 2011 and 2012 Annual LTIP [Member]	Dec. 31, 2013 Multi-Year LTIP [Member]	Dec. 31, 2012 Multi-Year LTIP [Member]	Dec. 31, 2011 Multi-Year LTIP [Member]	Dec. 31, 2013 Restricted Common Shares [Member]	Dec. 31, 2012 Restricted Common Shares [Member]	Dec. 31, 2011 Restricted Common Shares [Member]	Dec. 31, 2013 Restricted Share Awards [Member]	Dec. 31, 2012 Restricted Share Awards [Member]	Dec. 31, 2013 Restricted Share Awards [Member] Issued 06-01-2009 [Member]	Dec. 31, 2012 Restricted Share Awards [Member] Issued 06-01-2009 [Member]	Dec. 31, 2013 Restricted Share Awards [Member] Issued 06-01-2010 [Member]	Dec. 31, 2012 Restricted Share Awards [Member] Issued 06-01-2010 [Member]	Dec. 31, 2013 Restricted Share Awards [Member] Issued 06-30-2011 [Member]	Dec. 31, 2012 Restricted Share Awards [Member] Issued 06-30-2011 [Member]	Dec. 31, 2013 Restricted Share Awards [Member] Issued 04-18-2012 [Member]		Dec. 31, 2012 Restricted Share Awards [Member] Issued 04-18-2012 [Member]	Dec. 31, 2013 Restricted Share Awards [Member] Issued 06-29-2012 [Member]	Dec. 31, 2012 Restricted Share Awards [Member] Issued 06-29-2012 [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member]	Dec. 31, 2012 Multi-year LTIP Trustee [Member]	Dec. 31, 2011 Multi-year LTIP Trustee [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member] Annual Retainer [Member]	Dec. 31, 2012 Multi-year LTIP Trustee [Member] Annual Retainer [Member]	Dec. 31, 2011 Multi-year LTIP Trustee [Member] Annual Retainer [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member] Issued 12-28-2012 [Member]	Dec. 31, 2012 Multi-year LTIP Trustee [Member] Issued 12-28-2012 [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member] Issued 03-30-2011 [Member]	Dec. 31, 2012 Multi-year LTIP Trustee [Member] Issued 03-30-2011 [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member] Issued 06-05-2012 [Member]	Dec. 31, 2012 Multi-year LTIP Trustee [Member] Issued 06-05-2012 [Member]	Dec. 31, 2013 Multi-year LTIP Trustee [Member] Issued 12-27-2013 [Member]	Dec. 27, 2013 Board Of Trustees [Member]	Jun. 03, 2013 Board Of Trustees [Member]	Dec. 31, 2013 Board Of Trustees [Member]	Dec. 31, 2012 Board Of Trustees [Member]	Dec. 31, 2011 Board Of Trustees [Member]	Dec. 31, 2013 Non-employees [Member]	Dec. 31, 2012 Non-employees [Member]	Dec. 31, 2011 Non-employees [Member]	Dec. 31, 2013 Non-employees [Member] Issued 03-26-2012 [Member]	Dec. 31, 2012 Non-employees [Member] Issued 03-26-2012 [Member]	Dec. 31, 2013 Non-employees [Member] Issued 02-01-2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 9,746,000	$ 9,678,000	$ 9,746,000	$ 9,678,000	$ 7,590,000	$ 1,144,000	$ 2,618,000	$ 3,925,000	$ 2,179,000	$ 3,481,000	$ 3,192,000	$ 3,192,000	$ 1,618,000	$ 1,911,000	$ 1,662,000														$ 55,000	$ 43,000	$ 21,000	$ 160,000	$ 66,000	$ 111,000										$ 496,000	$ 402,000	$ 322,000	$ 174,000	$ 139,000	$ 103,000
Unearned Compensation			1,305,000	1,072,000						1,157,000	3,192,000					4,102,000	5,420,000		217,000		82,000	28,000	51,000	3,746,000		4,842,000	110,000	228,000	124,000	113,000					39,000	59,000		18,000	18,000	36,000	67,000						81,000	74,000			74,000	81,000
Terms of Share-based payment awards										On May 7, 2010, the Compensation Committee adopted the 2010 Multi-Year LTIP.  This program had a three-year performance period, which commenced on January 1, 2010 and ended on December 31, 2012.  The common shares issuable under this program were based upon the Company's achievement of a certain level of (1) absolute total shareholder return (75% of the award), and (2) relative total shareholder return as compared to the Company's peer group (25% of the award).  The Compensation Committee of the Board of Trustees concluded that the performance criteria for this program had been met and 3,051,862 common shares were issued under this program during the year ended December 31, 2013, of which 1,525,931 vested immediately, and the remaining vested on December 31, 2013.    NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)On April 15, 2013, the Compensation Committee approved the 2013 Multi-Year LTIP. The common shares issuable under this program are based on the Company's achievement of a certain level of (1) absolute total shareholder return (50% of the award), (2) relative total shareholder return as compared to the Company's peer group (25% of the award), and (3) relative growth in revenue per available room compared to the Company's peer group (25% of the award). This program has a three-year performance period which commenced on January 1, 2013 and ends December 31, 2015. As of December 31, 2013, no common shares have been issued pursuant to the 2013 Plan to the executive officers in settlement of the 2013 Multi-Year LTIP awards. The Company accounts for the total shareholder return components of these grants as market based awards where the Company estimates unearned compensation at the grant date fair value which is then amortized into compensation cost over the vesting period of each individual plan.
Shareholders return as percentage of award for achievement level one (in hundredths)										75.00%
Shareholders return as percentage of award for achievement level two (in hundredths)										25.00%
Shares Issued (in shares)										3,051,862						2,085,631		744,128		182,308		17,692		1,035,595			52,703					39,133			12,000		10,800		10,800		12,000	32,400	54,422				58,500			28,500		30,000
Shares Vested (in shares)			1,391,883	704,962						1,525,931						958,835	702,785	744,128	558,305	182,308	139,522	9,919	4,958				22,480		22,002	11,400					4,002		10,800	7,800	7,200	3,600							43,499	15,000		28,500	15,000	14,999
Share Price on date of grant (in dollars per share)																		$ 2.800		$ 4.630		$ 5.570		$ 5.470			$ 5.280															$ 5.63	$ 5.78							$ 5.45		$ 5.41
Percentage premium on retainer equity option (in hundredths)																																25.00%
Forfeitures																																	$ 40,000	$ 33,000
Unvested Share Awards [Abstract]
Vesting Period																		4 years						5 years											3 years		3 years		3 years		3 years									2 years		2 years
Vesting Schedule (in hundredths)																		25.00%						33.30%	[1]										33.00%		33.00%		33.00%		33.00%									50.00%		50.00%

[1] On April 18, 2012, the Company entered into amended and restated employment agreements with the Company’s executive officers.  To induce the executives to agree to the substantial reduction in benefits upon certain terminations following a change of control as described in the agreements, the Company awarded an aggregate of 1,035,595 restricted common shares to the executives pursuant to the 2012 Plan.  None of these restricted common shares will vest prior to the third anniversary of the date of issuance.  Thereafter, 33.3% of each award of restricted common shares will vest on each of the third, fourth and fifth anniversaries of the date of issuance.  Vesting will accelerate upon a change of control or if the relevant executive’s employment with the Company were to terminate for any reason other than for cause (as defined in the agreements).

XML

Consolidated Statements Of Equity (USD $) In Thousands, except Share data, unless otherwise specified	Common Shares [Member] Class A Common Shares [Member] USD ($)	Common Shares [Member]	Preferred Shares [Member] USD ($)	Additional Paid-In Capital [Member] USD ($)	Accumulated Other Comprehensive Loss [Member] USD ($)	Distributions in Excess of Net Earnings [Member] USD ($)	Total Shareholders' Equity [Member] USD ($)	Noncontrolling Interests Shares [Member]	Noncontrolling Interests Common Units [Member] USD ($)	Noncontrolling Interests Consolidated Joint Ventures [Member] USD ($)	Noncontrolling Interests Consolidated Variable Interest Entity [Member] USD ($)	Noncontrolling Interests [Member] USD ($)	Redeemable Noncontrolling Interests Shares [Member]	Redeemable Noncontrolling Interests Common Units [Member] USD ($)	Total USD ($)
Balance, redeemable noncontrolling interests at Dec. 31, 2010														$ 19,894
Balance at Dec. 31, 2010	1,692		24	918,215	(338)	(236,159)	683,434		19,410	474		19,884			703,318
Balance, redeemable noncontrolling interests (in shares) at Dec. 31, 2010													3,014,252
Balance (in shares) at Dec. 31, 2010		169,205,638	2,400,000					4,404,660
Unit Conversion	2			637			639		(868)			(868)		230	(229)
Unit Conversion (in shares)		195,000						(245,000)					50,000		195,000
Reclassification / Reallocation of Noncontrolling Interest				3,835			3,835		(13)			(13)		(3,822)	3,822
Preferred Stock Issuance
Preferred Stock Offering, net of costs			46	110,931			110,977								110,977
Preferred Stock Offering, net of costs (in shares)			4,600,000
Common Stock Issuance
Common Units Issued for Acquisitions									204			204			204
Common Units Issued for Acquisitions (in shares)								46,404
Dividends and Distributions declared:
Common Stock ($0.23 and $0.24 per share)						(39,080)	(39,080)								(39,080)
Preferred Stock						(10,499)	(10,499)								(10,499)
Common Units ($0.23 and $0.24 per share)									(969)			(969)		(702)	(969)
Dividend Reinvestment Plan				14			14								14
Dividend Reinvestment Plan (in shares)		2,933
Stock Based Compensation
Grants	5			1,630			1,635								1,635
Grants (in shares)		566,402
Amortization				5,765			5,765								5,765
Contribution by Noncontrolling Interests in Consolidated Joint Ventures										342		342			342
Deconsolidation of Consolidated Joint Ventures										(322)		(322)			(322)
Change in Fair Value of Derivative Instruments					(813)		(813)								(813)
Net Income (Loss)						(25,234)	(25,234)		(902)	(187)		(1,089)		(645)	(26,323)
Balance, redeemable noncontrolling interests at Dec. 31, 2011														14,955
Balance at Dec. 31, 2011	1,699		70	1,041,027	(1,151)	(310,972)	730,673		16,862	307		17,169		14,955	747,842
Balance, redeemable noncontrolling interests (in shares) at Dec. 31, 2011													3,064,252
Balance (in shares) at Dec. 31, 2011		169,969,973	7,000,000					4,206,064
Unit Conversion	1			571			572		(572)			(572)
Unit Conversion (in shares)		157,810						(157,810)							157,810
Reclassification / Reallocation of Noncontrolling Interest				(966)			(966)							966	(966)
Common Stock Issuance
Common Stock Offering, net of costs	240			128,318			128,558								128,558
Common Stock Offering, net of costs (in shares)		24,000,000
Common Stock Option Cancellation	25			(25)
Common Stock Option Cancellation (in shares)		2,521,561
Dividends and Distributions declared:
Common Stock ($0.23 and $0.24 per share)						(46,138)	(46,138)								(46,138)
Preferred Stock						(14,000)	(14,000)								(14,000)
Common Units ($0.23 and $0.24 per share)									(991)			(991)		(736)	(991)
Dividend Reinvestment Plan				24			24								24
Dividend Reinvestment Plan (in shares)		5,117
Stock Based Compensation
Grants	21			2,616			2,637								2,637
Grants (in shares)		2,017,895
Amortization				6,727			6,727								6,727
Consolidation of Variable Interest Entity											956	956			956
Deconsolidation of Consolidated Joint Ventures										(307)		(307)			(307)
Change in Fair Value of Derivative Instruments					(635)		(635)								(635)
Net Income (Loss)						22,376	22,376		185		(480)	(295)		136	22,081
Balance, redeemable noncontrolling interests at Dec. 31, 2012															15,321
Balance at Dec. 31, 2012	1,986		70	1,178,292	(1,786)	(348,734)	829,828		15,484		476	15,960		15,321	845,788
Balance (in shares) at Dec. 31, 2012		198,672,356	7,000,000					4,048,254
Balance, redeemable noncontrolling interests (in shares) at Dec. 31, 2012													3,064,252
Unit Conversion	1			(234)			(233)		(766)			(766)			(999)
Unit Conversion (in shares)		27,790						(197,790)							27,790
Reclassification / Reallocation of Noncontrolling Interest									15,365			15,365		(15,365)	15,365
Reclassification / Reallocation of Noncontrolling Interest (in shares)								3,064,252					(3,064,252)
Preferred Stock Issuance
Preferred Stock Offering, net of costs			30	72,340			72,370								72,370
Preferred Stock Offering, net of costs (in shares)			3,000,000
Preferred Stock Redemption			(24)	(59,976)			(60,000)								(60,000)
Preferred Stock Redemption (in shares)			(2,400,000)
Dividends and Distributions declared:
Common Stock ($0.23 and $0.24 per share)						(50,836)	(50,836)								(50,836)
Preferred Stock						(14,611)	(14,611)								(14,611)
Common Units ($0.23 and $0.24 per share)									(1,669)			(1,669)			(1,669)
Dividend Reinvestment Plan				38			38								38
Dividend Reinvestment Plan (in shares)		7,206
Stock Based Compensation
Grants	41			467			508								508
Grants (in shares)		4,052,067
Amortization				9,871			9,871								9,871
Change in Fair Value of Derivative Instruments					1,410		1,410								1,410
Net Income (Loss)						49,613	49,613		1,109		(818)	291		44	49,904
Balance at Dec. 31, 2013	$ 2,028		$ 76	$ 1,200,798	$ (376)	$ (364,568)	$ 837,958		$ 29,523		$ (342)	$ 29,181			$ 867,139
Balance (in shares) at Dec. 31, 2013		202,759,419	7,600,000					6,914,716

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets:
Consolidation of variable interest entity assets	$ 85,759	$ 86,657
Hotel Accounts Receivable, Allowance for Doubtful Accounts	43	365
Deferred Financing Costs, Accumulated Amortization	7,070	4,841
Intangible Assets, Accumulated Amortization	3,227	2,413
Liabilities and Equity:
Consolidation of variable interest entity debt	$ 55,714	$ 57,256
Shareholders' Equity:
Preferred Shares - Outstanding (in shares)	7,600,000	7,000,000
Preferred Shares - Liquidation Preference Value (in dollars per share)	$ 25	$ 25
Series B and C Preferred Shares [Member]
Shareholders' Equity:
Preferred Shares - Par Value (in dollars per share)	$ 0.01	$ 0.01
Preferred Shares - Authorized (in shares)	29,000,000	29,000,000
Preferred Shares - Issued (in shares)	7,600,000
Preferred Shares - Outstanding (in shares)	7,600,000
Series A and B Preferred Shares [Member]
Shareholders' Equity:
Preferred Shares - Authorized (in shares)	29,000,000	29,000,000
Preferred Shares - Issued (in shares)		7,000,000
Preferred Shares - Outstanding (in shares)		7,000,000
Class A Common Shares [Member]
Shareholders' Equity:
Common Shares - Par Value (in dollars per share)	$ 0.01	$ 0.01
Common Shares - Authorized (in shares)	300,000,000	300,000,000
Common Shares - Issued (in shares)	202,759,419	198,672,356
Common Shares - Outstanding (in shares)	202,759,419	198,672,356
Class B Common Shares [Member]
Shareholders' Equity:
Common Shares - Par Value (in dollars per share)	$ 0.01	$ 0.01
Common Shares - Authorized (in shares)	1,000,000	1,000,000
Common Shares - Issued (in shares)	0	0
Common Shares - Outstanding (in shares)	0	0

XML

Fair Value Measurements And Derivative Instruments

12 Months Ended

Dec. 31, 2013

Fair Value Measurements And Derivative Instruments [Abstract]

Fair Value Measurements And Derivative Instruments

NOTE 8 –FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

Fair Value Measurements

Our determination of fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, we utilize a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

As of December 31, 2013, the Company’s derivative instruments represented the only financial instruments measured at fair value. Currently, the Company uses derivative instruments, such as interest rate swapsand caps,to manage its interest raterisk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and the counterparties. However, as of December 31, 2013 we have assessed the significance of the effect of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

NOTE 8 – FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (CONTINUED)

Derivative Instruments

								Estimated Fair Value
Hedged Debt	Type	Strike Rate	Index	Effective Date	Maturity Date		Notional Amount		December 31, 2013		December 31, 2012
Holiday Inn Express Times Square, New York, NY*	Swap	1.240%	1-Month LIBOR + 4.00%	May 31, 2011	June 1, 2014	$	-	$	-	$	(530)
Courtyard, LA Westside, Culver City, LA	Swap	1.097%	1-Month LIBOR + 3.85%	September 29, 2011	September 29, 2015		30,000		(374)		(559)
Capitol Hill Hotel, Washington, DC	Swap	0.540%	1-Month LIBOR + 3.25%	February 1, 2012	February 1, 2015		27,119		(88)		(143)
Hotel 373, New York, NY	Cap	2.000%	1-Month LIBOR + 3.85%	May 24, 2012	June 1, 2015		18,477		1		6
Courtyard, Miami, FL	Swap	0.820%	1-Month LIBOR + 3.50%	July 2, 2012	July 1, 2016		60,000		(354)		(658)
Subordinated Notes Payable	Cap	2.000%	1-Month LIBOR + 3.00%	July 30, 2012	July 30, 2014		51,548		-		-
Unsecured Term Loan	Swap	0.545%	1-Month LIBOR + 2.40%	November 5, 2012	November 5, 2016		100,000		430		(135)
Unsecured Term Loan	Swap	0.600%	1-Month LIBOR + 2.40%	December 18, 2012	November 5, 2016		50,000		137		(167)
Hyatt, Union Square, New York, NY	Cap	2.000%	1-Month LIBOR + 4.19%	April 9, 2013	April 9, 2016		55,000		76		-
								$	(172)	$	(2,186)

*On January 3, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY and paid $565 to settle its obligation under the swap. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012.

On April 9, 2013, we entered into an interest rate cap that effectively fixes interest payment when 1 month-U.S. dollar LIBOR exceeds 2.00% on a variable rate mortgage on Hyatt Union Square, New York, NY. The notional amount of the interest rate cap is $55,000 and equals the principal of the variable rate mortgage being hedged. This interest rate cap matures on April 9, 2016. Please see “Note 2-Investments in Hotel Properties” for more information.

The fair value of certain swaps and our interest rate caps is included in other assets at December 31, 2013 and December 31, 2012 and the fair value of certain of our interest rate swaps is included in accounts payable, accrued expenses and other liabilities at December 31, 2013 and December 31, 2012.

The net change in fair value of derivative instruments designated as cash flow hedges was a gain of $1,410 and a loss of $635, and a loss of $813 for theyears ended December 31, 2013, 2012, and 2011, respectively. These unrealized gains and losses were reflected on our consolidated balance sheet in accumulated other comprehensive income.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate derivative. The change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1,284  of net unrealized gains/losses from accumulated other comprehensive income as an increase to interest expense during 2013. During 2014, the Company estimates that an additional $1,227 will be reclassified as an increase to interest expense.

Fair Value of Debt

The Company estimates the fair value of its fixed rate debt and the credit spreads over variable market rates on its variable rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of the debt obligation with similar credit policies. Credit spreads take into consideration general market conditions and maturity. The inputs utilized in estimating the fair value of debt are classified in Level 2 of the fair value hierarchy.  As of December 31, 2013, the carrying value and estimated fair value of the Company’s debt were $819,336 and $828,974, respectively.  As of December 31, 2012, the carrying value and estimated fair value of the Company’s debt were $792,708 and $814,451, respectively.

NOTE 8 – FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (CONTINUED)

Impaired Hotel Property

As discussed in “Note 12-Discontinued Operations,” the Company recorded an impairment loss for the year ended December 31, 2013 of approximately $3,723 for the Holiday Inn Express Camp Springs, MD for which the anticipated net proceeds from the sale of the hotel did not exceed the carrying value.  The fair value of the hotel was estimated using level 2 inputs.

As discussed in “Note 12-Discontinued Operations,” the Company recorded an impairment loss for the year ended December 31, 2013 of approximately $6,591 for the non-core hotel portfolio the Company is under contract to sell for which the anticipated net proceeds did not exceed the carrying value.  The fair value of the non-core hotel portfolio was estimated using level 2 inputs.

XML

Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Feb. 25, 2014 Class A Common Shares [Member]	Feb. 25, 2014 Class B Common Shares [Member]
Entity Registrant Name	HERSHA HOSPITALITY TRUST
Entity Central Index Key	0001063344
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 1.1
Entity Common Stock, Shares Outstanding			202,763,419	0
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013

XML

Share Based Payments

12 Months Ended

Dec. 31, 2013

Share Based Payments [Abstract]

Share Based Payments

NOTE 9 – SHARE BASED PAYMENTS

In May 2011, the Company established and our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan (the “2012 Plan”) for the purpose of attracting and retaining executive officers, employees, trustees and other persons and entities that provide services to the Company.

Executives & Employees

Annual Long Term Equity Incentive Programs

To further align the interests of the Company’s executives with those of shareholders, the Compensation Committee grants annual long term equity incentive awards that are both “performance based” and “time based.”

On April 15, 2013, the Compensation Committee adopted the 2013 Annual LTIP for the executive officers, pursuant to which the executive officers are eligible to earn equity awards in the form of stock awards or performance share awards issuable pursuant to the 2012 Plan. Shares are earned under the 2013 Annual LTIP based on achieving a threshold, target or maximum level of performance and market based defined areas. The Company accounts for these grants as performance awards for which the Company assesses the probable achievement of the performance conditions at the end of the period. Stock based compensation of $1,144, was recorded for the year ended December 31, 2013 for the 2013 Annual LTIP and is included in general and administrative expense in the consolidated statements of operations. As of December 31, 2013, no common shares have been issued pursuant to the 2012 Plan to the executive officers in settlement of 2013 Annual LTIP awards.

Stock based compensation expense related to the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP of $2,618,  $3,925, and $2,179 was incurred during the years ended December 31, 2013, 2012, and 2011, respectively.  Unearned compensation related to the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP as of December 31, 2013 and December 31, 2012 was $1,305and$1,072, respectively. The following table is a summary of all unvested share awards issued to executives under the 2012 Annual LTIP, 2011 Annual LTIP, and 2010 Annual LTIP:

						Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
March 20, 2013
(2012 Annual LTIP)	779,045	$	5.95	3 years	25%/year (1)	389,520	-	$	1,039	$	-
March 26, 2012
(2011 Annual LTIP)	748,927	$	5.45	3 years	25%/year (1)	561,694	374,462		266		892
March 30, 2011
(2010 Annual LTIP)	440,669	$	5.98	3 years	25%/year (1)	440,669	330,500		-		180
						1,391,883	704,962	$	1,305	$	1,072

(1)25% of the issued shares vested immediately upon issuance.  In general, the remaining shares vest 25% on the first through third anniversaries of the date of issuance (subject to continuous employment through the applicable vesting date).

Multi-Year LTIP

On May 7, 2010, the Compensation Committee adopted the 2010 Multi-Year LTIP.  This program had a three-year performance period, which commenced on January 1, 2010 and ended on December 31, 2012.  The common shares issuable under this program were based upon the Company’s achievement of a certain level of (1) absolute total shareholder return (75% of the award), and (2) relative total shareholder return as compared to the Company’s peer group (25% of the award).  The Compensation Committee of the Board of Trustees concluded that the performance criteria for this program had been met and 3,051,862 common shares were issued under this program during the year ended December 31, 2013, of which 1,525,931 vested immediately, and the remaining vested on December 31, 2013.    

NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)

On April 15, 2013, the Compensation Committee approved the 2013 Multi-Year LTIP.  The common shares issuable under this program are based on the Company’s achievement of a certain level of (1) absolute total shareholder return (50% of the award),

(2) relative total shareholder return as compared to the Company’s peer group (25% of the award), and (3) relative growth in revenue per available room compared to the Company’s peer group (25% of the award).  This program has a three-year performance period which commenced on January 1, 2013 and ends December 31, 2015. As of December 31, 2013, no common shares have been issued pursuant to the 2013 Plan to the executive officers in settlement of the 2013 Multi-Year LTIP awards. The Company accounts for the total shareholder return components of these grants as market based awards where the Company estimates unearned compensation at the grant date fair value which is then amortized into compensation cost over the vesting period of each individual plan. The Company accounts for the RevPAR component of the grants as performance-based awards for which the Company assesses the probability of achievement of the performance condition at the end of each period.

Stock based compensation expense of $3,481,  $3,192 and $3,192 was recorded for the years ended December 31, 2013, 2012, and 2011, respectively, for the Multi-Year LTIPs.  Unearned compensation related to the multi-year program as of December 31, 2013 and December 31, 2012, respectively, was $1,157 and $3,192.

Restricted Share Awards

In addition to stock based compensation expense related to awards under the Multi-Year LTIPs and Annual LTIPs, stock based compensation expense related to restricted common shares issued to executives and employees of the Company of  $1,618,  $1,911, and $1,662 was incurred during the years ended December 31, 2013, 2012, and 2011 respectively.  Unearned compensation related to the restricted share awards as of December 31, 2013 and December 31, 2012 was $4,102 and  $5,420, respectively.  The following table is a summary of all unvested share awards issued to executives under the 2012 Plan and prior to equity incentive plans:

						Shares Vested			Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
June 1, 2009	744,128	$	2.80	4 years	25%/year	744,128	558,305	$	-	$	217
June 1, 2010	182,308		4.63	2-3 years	25-50%/year	182,308	139,522		-		82
June 30, 2011	17,692		5.57	2-4 years	25-50%/year	9,919	4,958		28		51
April 18, 2012	1,035,595		5.47	5 years	33% Year 3, 4, 5 (1)	-	-		3,746		4,842
June 29, 2012	52,703		5.28	2-4 years	25-50%/year	22,480	-		110		228
June 28, 2013	48,600		5.64	2-4 years	25-50%/year	-	-		199		-
September 20, 2013	4,605		5.52	2-4 years	25-50%/year	-	-		19		-
Total	2,085,631					958,835	702,785	$	4,102	$	5,420

(1)On April 18, 2012, the Company entered into amended and restated employment agreements with the Company’s executive officers.  To induce the executives to agree to the substantial reduction in benefits upon certain terminations following a change of control as described in the agreements, the Company awarded an aggregate of 1,035,595 restricted common shares to the executives pursuant to the 2012 Plan.  None of these restricted common shares will vest prior to the third anniversary of the date of issuance.  Thereafter, 33.3% of each award of restricted common shares will vest on each of the third, fourth and fifth anniversaries of the date of issuance.  Vesting will accelerate upon a change of control or if the relevant executive’s employment with the Company were to terminate for any reason other than for cause (as defined in the agreements).

Trustees

Annual Retainer

The Compensation Committee approved a program that allows the Company’s trustees to make a voluntary election to receive any portion of the annual cash retainer in the form of common equity valued at a 25% premium to the cash that would have been received.  On December 27, 2013, we issued 39,133 shares which do not fully vest until December 31,2014.  Compensation expense incurred for the years ended December 31, 2013, 2012, and 2011,  respectively, was $160,  $66, and $111,which was offset by forfeitures as of December 31, 2012 and 2011, respectively, of $40 and $33.

NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)

The following table is a summary of all unvested share awards issued to trustees in lieu of annual cash retainer:

						Unearned Compensation
Original Issuance Date	Shares Issued		Share Price on date of grant	Vesting Period	Vesting Schedule		December 31, 2013		December 31, 2012
December 27, 2013	39,133	$	5.63	1 year	100%	$	220	$	-
December 28, 2012	32,417		4.93	1 year	100%		-		160
Total	71,550					$	220	$	160

Multi-Year Long-Term Equity Incentives

Compensation expense for the multi-year long term incentive plans for the Company’s trustees incurred for the years ended December 31, 2013, 2012, and 2011, respectively, was $55,  $43, and $21.  Unearned compensation related to the multi-year long term equity incentives was $124  and $113 as of December 31, 2013 and December 31, 2012, respectively.

 The following table is a summary of all unvested share awards issued to trustees under the 2012 Plan and prior to equity incentive plans:

				Shares Vested		Unearned Compensation
Original Issuance Date	Shares Issued	Vesting Period	Vesting Schedule	December 31, 2013	December 31, 2012		December 31, 2013		December 31, 2012
December 27, 2013	12,000	3 years	33%/year	-	-	$	67	$	-
December 28, 2012	12,000	3 years	33%/year	4,002	-		39		59
June 5, 2012	10,800	3 years	33%/year	7,200	3,600		18		36
March 30, 2011	10,800	3 years	33%/year	10,800	7,800		-		18
				22,002	11,400	$	124	$	113

Share Awards

Compensation expense related to share awards issued to the Board of Trustees of $496,  $402 and $322 was incurred during the years ended December 31, 2013, 2012, and 2011, respectively and is recorded in general and administrative expense on the statement of operations. Share awards issued to the Board of Trustees are immediately vested. On June 3, 2013 an aggregate 54,422 shares were issued to the Board of Trustees at a price per share on the date of grant of $5.78.  On December 27, 2013, an aggregate32,400 shares were issued to the Board of Trustees at a price per share on the date of grant of $5.63.

Non-employees

The Company issues share based awards as compensation to non-employees for services provided to the Company consisting primarily of restricted common shares.  The Company recorded stock based compensation expense of $174,  $139, and $103 for the years ended December 31, 2013, 2012, and 2011, respectively.  Unearned compensation related to the restricted share awards as of December 31, 2013 and December 31, 2012 was $81 and$74, respectively. The following table is a summary of all unvested share awards issued to non-employees under the Company’s 2008 Equity Incentive Plan and the 2012 Plan:

						Shares Vested			Unearned Compensation
	Shares		Share Price on	Vesting	Vesting	December 31,	December 31,		December 31,		December 31,
Original Issuance Date	Issued		date of grant	Period	Schedule	2013	2012		2013		2012
February 1, 2013	30,000	$	5.41	2 years	50%/year	14,999	-	$	81	$	-
March 26, 2012	28,500	$	5.45	2 years	50%/year	28,500	15,000		-		74
Total	58,500					43,499	15,000	$	81	$	74

XML

Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended					12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Minimum distribution requirement of its real estate investment trust taxable income to its shareholders (in hundredths)						90.00%
Net operating losses (income)						$ 56,630	$ 46,180	$ 32,914
Total income tax expense	(3,318)	(2,375)	1,222	(1,129)	(3,355)	(5,600)	(3,355)
Valuation allowance	804				804	804	804
Tax Credits						280
Federal [Member]
Segment Reporting Information [Line Items]
Net operating loss carryforwards	21,798					21,798
State [Member]
Segment Reporting Information [Line Items]
Net operating loss carryforwards	$ 22,210					$ 22,210

XML

Consolidated Statement Of Operations (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Revenue:
Hotel Operating Revenues	$ 338,064,000		$ 299,005,000		$ 229,156,000
Interest Income from Development Loans	158,000		1,998,000		3,427,000
Other Revenues	191,000		212,000		330,000
Total Revenues	338,413,000		301,215,000		232,913,000
Operating Expenses:
Hotel Operating Expenses	188,431,000		161,982,000		121,402,000
Gain on Insurance Settlements	(403,000)
Hotel Ground Rent	985,000		835,000		877,000
Real Estate and Personal Property Taxes and Property Insurance	24,083,000		19,341,000		15,936,000
General and Administrative (including Share Based Payments of $9,746, $9,678 and $7,590 for the years ended December 31, 2013, 2012, and 2011, respectively)	24,025,000		23,455,000		18,488,000
Acquisition and Terminated Transaction Costs	974,000		1,179,000		2,734,000
Depreciation and Amortization	55,784,000		48,243,000		40,562,000
Gain on Hotel Acquisitions, Net	(12,096,000)
Total Operating Expenses	281,783,000		255,035,000		199,999,000
Operating Income	56,630,000		46,180,000		32,914,000
Interest Income	1,784,000		1,311,000		456,000
Interest Expense	39,984,000		37,295,000		33,447,000
Other Expense	897,000		740,000		1,011,000
Loss on Debt Extinguishment	545,000		3,189,000		102,000
Income (Loss) Before (Loss) Income from Unconsolidated Joint Venture	16,988,000		6,267,000		(1,190,000)
(Loss) Income from Unconsolidated Joint Ventures	(22,000)		(232,000)		210,000
Impairment of Investment in Unconsolidated Joint	(1,813,000)				(1,677,000)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Venture			(1,892,000)		2,757,000
(Loss) Income from Unconsolidated Joint Venture Investments	(1,835,000)		(2,124,000)		1,290,000
Income Before Income Taxes	15,153,000		4,143,000		100,000
Income Tax Benefit	5,600,000		3,355,000
Income from Continuing Operations	20,753,000		7,498,000		100,000
Discontinued Operations (Note 12):
Gain on Disposition of Hotel Properties	32,121,000		11,231,000		991,000
Impairment of Discontinued Assets	(10,314,000)				(30,248,000)
Income from Discontinued Operations, Net of Income Taxes	7,388,000		3,489,000		2,189,000
Income (Loss) from Discontinued Operations	29,195,000		14,720,000		(27,068,000)
Net Income (Loss)	49,948,000		22,218,000		(26,968,000)
(Income) Loss Allocated to Noncontrolling Interests	(335,000)		158,000		1,734,000
Preferred Distributions	(14,611,000)		(14,000,000)		(10,499,000)
Less: Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares	(2,250,000)
Net Income (Loss) Applicable to Common Shareholders	$ 32,752,000		$ 8,376,000		$ (35,733,000)
BASIC
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$ 0.02		$ (0.03)		$ (0.06)
(Loss) Income from Discontinued Operations Applicable to Common Shareholders	$ 0.14		$ 0.08		$ (0.15)
Net (Loss) Income Applicable to Common Shareholders	$ 0.16		$ 0.04		$ (0.21)
DILUTED
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$ 0.02		$ (0.03)		$ (0.06)
(Loss) Income from Discontinued Operations Applicable to Common Shareholders	$ 0.14		$ 0.08		$ (0.15)
Net (Loss) Income Applicable to Common Shareholders	$ 0.16		$ 0.04		$ (0.21)
Weighted Average Common Shares Outstanding:
Basic	198,390,450		187,415,270		168,753,382
Diluted	201,918,177	[1]	187,415,270	[1]	168,753,382	[1]

[1] Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

XML

Investment In Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2013

Investment In Unconsolidated Joint Ventures [Abstract]

Investment In Unconsolidated Joint Ventures

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of December 31, 2013 and December 31, 2012 our investment in unconsolidated joint ventures consisted of the following:

		Percent	Preferred		December 31,		December 31,
Joint Venture	Hotel Properties	Owned	Return		2013		2012
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50.0%	N/A	$	1,057	$	1,292
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50.0%	N/A		4,777		4,964
Mystic Partners, LLC	Hilton and Marriott branded hotels in CT	8.8%-66.7%	8.5% non-cumulative		6,210		9,751
				$	12,044	$	16,007

In 2013, we recorded an impairment loss of $1,813 related to the Courtyard, Norwich, CT, one of the properties owned by Mystic Partners, LLC.  Mystic Partners, LLC is currently in discussions to transfer title to the property to the lender.  As we do not anticipate recovering our investment balance in this asset, we have reduced the portion of our Mystic Partners, LLC investment related to this property to $0 as of December 31, 2013.

On February 1, 2013, the Company closed on the sale of its interest in one of the unconsolidated joint venture properties owned in part by Mystic Partners, LLC to its joint venture partner. As our investment in this unconsolidated joint venture equated the net proceeds distributed to us, we did not record a gain or loss in connection with the sale of this hotel.

As noted in “Note 2 – Investment in Hotel Properties,” on August 13, 2012, the Company purchased the remaining 50% ownership interest in Inn America Hospitality at Ewing, the lessee of the Courtyard by Marriot, Ewing, NJ. As such, we ceased to account for our investment in Inn America Hospitality at Ewing under the equity method of accounting as of August 13, 2012 because it became a consolidated subsidiary. Our interest in Inn America Hospitality at Ewing, which consisted of our investment in Inn America Hospitality at Ewing and a receivable, was remeasured and as a result based on the appraised value of the hotel, we recorded a loss of approximately $1,668 during the twelve months ended December 31, 2012.

As noted in “Note 2 – Investment in Hotel Properties,” on June 18, 2012, the Company purchased the remaining 50% ownership interest in Metro 29th, the lessee of the Holiday Inn Express, Manhattan, New York, NY. As such, we ceased to account for our investment in Metro 29th under the equity method of accounting as of June 18, 2012 because it became a consolidated subsidiary. Our interest in Metro 29th was remeasured, and as a result, we recorded a loss of approximately $224.

Fair value for our previously held investments in Inn America Hospitality at Ewing and Metro 29th was determined through the use of an income approach and was measured using Level 3 inputs. The income approach estimates an income stream for a hotel property (typically 5 years) and discounts this income plus a reversion (presumed sale) into a present value at a risk adjusted rate. RevPAR growth assumptions utilized in this approach are derived from market transactions as well as other financial and industry data. The terminal cap rate and discount rate are significant inputs to this valuation. The fair value measurements determined during the year included RevPAR growth assumptions ranging between 3% and 8%, terminal cap rates ranging between 8.5% and 9.5%, and discount rates of 10.5%. Changes in these inputs could result in a significant change in the valuation of our original joint venture investments and a change in the loss from remeasurement of investment in unconsolidated joint venture recognized during the period.

On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture. As a result of entering into these purchase and sale agreements, during the twelve months ended December 31, 2011, we recorded an impairment loss of approximately $1,677 for those hotel properties for which our investment in the unconsolidated joint venture did not exceed the net proceeds distributable to us on the sale of the hotel properties held by the joint venture based on the purchase price. On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three of the unconsolidated joint venture hotel properties. On May 8, 2012, the Company closed on the remaining four non-core hotel properties, including one of the unconsolidated joint venture hotel properties. As our investment in these unconsolidated joint ventures equated the net proceeds distributed to us, we did not record a gain or loss in connection with the sale of these hotel properties. See “Note 12 – Discontinued Operations” for more information.

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

Income or loss from our unconsolidated joint ventures is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets.

Income (loss) recognized during the years ended December  31, 2013, 2012, and 2011, for our investments in unconsolidated joint ventures is as follows:

	Year Ended December 31,
		2013		2012		2011
SB Partners, LLC	$	264	$	85	$	(171)
Hiren Boston, LLC		113		230		158
Mystic Partners, LLC		(399)		(433)		(364)
Inn American Hospitality at Ewing LLC		-		-		(28)
Metro 29th Street Associates, LLC		-		(114)		615
(Loss) Income from Unconsolidated Joint Venture Investments		(22)		(232)		210
Impairment from Unconsolidated Joint Ventures		(1,813)		-		(1,677)
(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Ventures		-		(1,892)		2,757
(Loss) Income from Unconsolidated Joint Venture Investments	$	(1,835)	$	(2,124)	$	1,290

On June 20, 2011, Hiren Boston, LLC refinanced its debt with a third party institutional lender and, as a result, our mortgage interest in the property was terminated and the outstanding principal balance of $13,750 was repaid to us in full. We have determined that we were no longer the primary beneficiary of Hiren Boston, LLC and it is no longer a consolidated subsidiary of the Company and we have begun to account for our investment in Hiren Boston, LLC under the equity method of accounting. Our interest in Hiren Boston, LLC has been remeasured and, as a result, we have recorded a gain of approximately $2,757 for the twelve months ended December 31, 2011. The fair value of our interest in Hiren Boston, LLC was based on a third party appraisal, which utilized the market approach.

The Mystic Partners, LLC joint venture agreement provides for an 8.5% non-cumulative preferred return based on our contributed equity interest in the venture. Cash distributions will be made from cash available for distribution, first, to us to provide an 8.5% annual non-compounded return on our unreturned capital contributions and then to our joint venture partner to provide an 8.5% annual non-compounded return of their unreturned contributions. Any remaining cash available for distribution will be distributed to us 10.5% with respect to the net cash flow from the Hartford Marriott, 7.0% with respect to the Hartford Hilton and 56.7%, with respect to the remaining two properties. Mystic Partners, LLC allocates income to us and our joint venture partner consistent with the allocation of cash distributions in accordance with the joint venture agreements.

Each of the Mystic Partners, LLC hotel properties, except the Hartford Hilton, is under an Asset Management Agreement with 44 New England to provide asset management services. Fees for these services are paid monthly to 44 New England and recognized as income in the amount of 1% of operating revenues, except for the Hartford Marriott which is 0.25% of operating revenues.

The Company and our joint venture partner in Mystic Partners, LLC jointly and severally guarantee the performance of the terms of a loan to Adriaen’s Landing Hotel, LLC, owner of the Hartford Marriott, in the amount of $50,000, and 315 Trumbull Street Associates, LLC, owner of the Hartford Hilton, in the amount of $27,000, if at any time during the term of the note and during such time as the net worth of Mystic Partners falls below the amount of the guarantee. We have determined that the probability of incurring loss under this guarantee is remote and the value attributed to the guarantee is de minimis.

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following tables set forth the total assets, liabilities, equity and components of net income or loss, including the Company’s share, related to the unconsolidated joint ventures discussed above as of December 31, 2013 and December 31, 2012 and for the years ended December 31, 2013, 2012, and 2011.

Balance Sheets
		December 31,		December 31,
		2013		2012
Assets
Investment in Hotel Properties, Net	$	114,221	$	118,506
Other Assets		19,146		20,709
Assets Held For Sale		-		5,875
Total Assets	$	133,367	$	145,090
Liabilities and Equity
Mortgages and Notes Payable	$	112,654	$	119,236
Other Liabilities		37,464		36,292
Liabilities Related to Assets Held For Sale		-		6,071
Equity:
Hersha Hospitality Trust		26,230		28,581
Joint Venture Partner(s)		(42,981)		(45,090)
Total Equity		(16,751)		(16,509)
Total Liabilities and Equity	$	133,367	$	145,090

Statements of Operations
	Year Ended December 31,
		2013		2012		2011
Room Revenue	$	58,273	$	62,058	$	63,896
Other Revenue		22,606		22,306		21,945
Operating Expenses		(55,179)		(57,131)		(56,607)
Interest Expense		(7,526)		(7,650)		(7,272)
Lease Expense		(996)		(3,729)		(5,505)
Property Taxes and Insurance		(3,034)		(3,438)		(4,280)
General and Administrative		(5,794)		(5,904)		(5,680)
Depreciation and Amortization		(6,697)		(6,533)		(6,034)
Loss Allocated to Noncontrolling Interests		(179)		(2,614)		(44)
Net Income from Continuing Operations		1,474		(2,635)		419
(Loss) Income from Discontinued Operations		(55)		121		1,503
Gain on Disposition of Hotel Properties		1,161		25,131		-
Net Income	$	2,580	$	22,617	$	1,922

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following table is a reconciliation of the Company’s share in the unconsolidated joint ventures’ equity to the Company’s investment in the unconsolidated joint ventures as presented on the Company’s balance sheets as of December 31, 2013 and December 31, 2012.

		December 31,		December 31,
		2013		2012
Company's share of equity recorded on the joint ventures' financial statements	$	26,230	$	28,581
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)		(14,186)		(12,574)
Investment in Unconsolidated Joint Ventures	$	12,044	$	16,007

(1)  Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:

· cumulative impairment of the Company’s investment in joint ventures not reflected on the joint ventures' financial statements;

· the Company’s basis in the investment in joint ventures not recorded on the joint ventures' financial statements; and

· accumulated amortization of the Company’s equity in joint ventures that reflects the Company’s portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures financial statements (this excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on the Company’s consolidated statement of operations).

XML

Investment In Hotel Properties

12 Months Ended

Dec. 31, 2013

Investment In Hotel Properties [Abstract]

Investment In Hotel Properties

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consists of the following at December 31, 2013 and December 31, 2012:

		December 31, 2013		December 31, 2012
Land	$	339,027	$	305,286
Buildings and Improvements		1,222,639		1,214,865
Furniture, Fixtures and Equipment		171,116		171,892
Construction in Progress		63,168		40,572
		1,795,950		1,732,615
Less Accumulated Depreciation		(260,115)		(265,902)
Total Investment in Hotel Properties	$	1,535,835	$	1,466,713

Depreciation expense was $61,500,  $55,956 and $55,336 (including depreciation on assets held for sale) for the years ended December 31, 2013, 2012, and 2011, respectively.

During the year ended December 31, 2013, we acquired the following wholly-owned hotel properties:

Hotel	Acquisition Date		Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Total Purchase Price
Hyatt Union Square, New York, NY*	4/9/2013	$	32,940	$	79,300	$	9,760	$	1,945	$	123,945
Courtyard by Marriott, San Diego, CA	5/30/2013		15,656		51,674		3,671		183		71,184
Residence Inn,    Coconut Grove, FL	6/12/2013		4,146		17,456		218		75		21,895
Blue Moon, Miami Beach, FL	12/20/2013		4,874		20,354		1,125		-		26,353
Winter Haven, Miami Beach, FL	12/20/2013		5,400		18,147		1,050		-		24,597
Total		$	63,016	$	186,931	$	15,824	$	2,203	$	267,974

*On April 9, 2013, we completed the acquisition of the Hyatt Union Square hotel in New York, NY from Risingsam Union Square LLC.  Consideration given in exchange for the property included$36,000 paid in cash to the seller and our cancellation of a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan of $55,000.  We recognized a net gain of approximately $12,108 on the purchase of the Hyatt Union Square hotel as the fair value of the assets acquired less any liabilities assumed exceeded the consideration transferred.

During the year ended December 31, 2013, we paid $855 in acquisition costs related to the above acquired assets.

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2013 are total revenues of $22,889and a  total net income of $1,412for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition:

	Year Ended December 31,
	2013
Hotel		Revenue		Net (Loss) Income
Hyatt Union Square, New York, NY	$	11,272	$	(1,466)
Courtyard by Marriott, San Diego, CA		8,350		1,914
Residence Inn, Coconut Grove, FL		2,889		713
Blue Moon, Miami Beach, FL		175		111
Winter Haven, Miami Beach, FL		203		140
Total	$	22,889	$	1,412

During the year ended December 31, 2012, we acquired the following wholly-owned hotel and hotel development properties:

Hotel	Acquisition Date	Land		Buildings and Improvements		Furniture Fixtures and Equipment		Franchise Fees and Loan Costs		Leasehold Liability		Total Purchase Price
The Rittenhouse Hotel, Philadelphia, PA	3/1/2012	$	7,119	$	29,605	$	3,580	$	2,156	$	(827)	$	42,460
The Boxer, Boston, MA	5/7/2012		1,456		14,954		1,790		-		-		18,200
Holiday Inn Express, New York, NY	6/18/2012		30,329		57,016		2,856		98		-		90,299
Courtyard by Marriot, Ewing, NJ	8/13/2012		950		9,835		1,415		30		-		12,230
Total		$	39,854	$	111,410	$	9,641	$	2,284	$	(827)	$	163,189

On August 13, 2012, the Company purchased, from an unaffiliated seller, the remaining 50% ownership in Inn America Hospitality at Ewing, LLC (“Inn at Ewing”), the owner of the Courtyard by Marriot, Ewing, NJ. Consideration given for this interest in Inn at Ewing included the assumption of the property’s mortgage debt of $12,875.

On June 18, 2012, the Company purchased, from an unaffiliated seller, the remaining 50% ownership interest in Metro 29th Street Associates, LLC (“Metro 29th”), the lessee of the Holiday Inn Express, New York, NY. Consideration given for this interest in Metro 29th included $10,000 cash and the forgiveness of approximately $800 of accrued interest payable under a mezzanine loan made by the Company to an affiliate of the seller. Brisam Management DE, LLC (“Brisam”), as the owner of the land, building and improvements leased by Metro 29th, is considered a variable interest entity and, based on our evaluation, we determined that we are the primary beneficiary of this variable interest entity and therefore Brisam is consolidated in our financial statements. As a result, we included in our consolidated financial statements approximately $90,201 in investment in hotel properties and an aggregate of $73,038 in first mortgage and mezzanine debt at acquisition. On the date we acquired the remaining interest in Metro 29th, we determined that the stated rate of interest on the first mortgage debt was above market and, accordingly, recorded a $3,436 premium. Also included in this transaction was an option to acquire the equity interests in the entity owning the real estate assets or the real estate assets from Brisam for nominal consideration. The option is exercisable by the Company after September 1, 2016 or before that date in the event of certain specified events. The equity interest may be put to the Company by the Seller at any time. On June 29, 2012, the Company repaid the $15,000 mezzanine debt.

As shown in the table below, included in the consolidated statements of operations for the year ended December 31, 2012 are total revenues of $31,393 and total net income of $1,085 for hotels we have acquired and consolidated since the date of acquisition. These amounts represent the results of operations for these hotels since the date of acquisition: 

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

	Year Ended December 31,
	2013				2012
Hotel	Revenue		Net (Loss) Income		Revenue		Net (Loss) Income
The Rittenhouse Hotel, Philadelphia, PA	$	17,395	$	(2,827)	$	16,812	$	(1,834)
The Boxer, Boston, MA		3,799		(241)		2,791		574
Holiday Inn Express, New York, NY		16,746		1,541		10,170		2,142
Courtyard by Marriot, Ewing, NJ		4,210		875		1,620		203
Total	$	42,150	$	(652)	$	31,393	$	1,085

Pro Forma Results (Unaudited)

The following condensed pro forma financial data are presented as if all acquisitions completed since January 1, 2013 and 2012 had been completed on January 1, 2012 and 2011. Properties acquired without any operating history are excluded from the condensed pro forma operating results. The condensed pro forma financial data is not necessarily indicative of what actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2013 and 2012 at the beginning of the year presented, nor do they purport to represent the results of operations for future periods.

	Year Ended December 31,
	2013		2012
Pro Forma Total Revenues	$	353,407	$	331,587
Pro Forma Income from Continuing Operations	$	22,651	$	7,408
(Loss) Income from Discontinued Operations		29,195		14,720
Pro Forma Net Income		51,846		22,128
Loss Allocated to Noncontrolling Interest		271		(154)
Preferred Distributions		(14,611)		(14,000)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares		(2,250)		-
Pro Forma Net (Loss) Income Applicable to Common Shareholders	$	35,256	$	7,974
Pro Forma Income Applicable to Common Shareholders per Common Share
Basic	$	0.18	$	0.04
Diluted	$	0.18	$	0.04
Weighted Average Common Shares Outstanding
Basic		198,390,450		187,415,270
Diluted		201,918,177		187,415,270

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

Asset Development and Renovation

The Company has opportunistically engaged in development of hotel assets. On July 22, 2011, the Company completed the acquisition of the real property and improvements located at 32 Pearl Street, New York, NY, anticipated to become a Hampton Inn, from an unaffiliated seller for a total purchase price of $28,300. The property is a re-development project which was initiated in 2008.

In January 2014, the Company completed construction of an additional oceanfront tower, additional meeting space and structured parking on a land parcel adjacent to the Courtyard by Marriott, Miami, Florida, a hotel acquired on November 16, 2011. This land parcel was included in the acquisition of the hotel.

We capitalize expenditures related to hotel development projects and renovations, including indirect costs such as interest expense, real estate taxes and utilities related to hotel development projects and renovations.

We have capitalized the following indirect development costs for the years ended December 31, 2013, 2012 and 2011:

	Year Ended December 31,
	2013		2012		2011
Property Tax	$	388	$	296	$	218
Interest Expense		1,318		1,542		1,372
Utility		3		9		201
Total	$	1,709	$	1,847	$	1,791

In October 2012, Hurricane Sandy affected numerous hotels  within our portfolio. Two hotels within our portfolio were significantly impacted by this natural disaster; one hotel was inoperable (Holiday Inn Express Water Street, New York, NY) and one hotel development project has incurred delays in construction (Hampton Inn, Pearl Street, New York, NY). We have recorded estimated property losses of $1,586 on the Holiday Inn Express Water Street and a corresponding insurance claim receivable of $1,486.  This hotel re-opened in April 2013.  We have recorded estimated property losses of $1,997 on the Hampton Inn Pearl Street and a corresponding insurance claim receivable of $1,897, and we expect this hotel to open in the first quarter of 2014.  Of the $6,546in aggregate insurance claims that we estimate to receive,  $4,840 was received as of December 31, 2013.  These aggregate claims include property losses and remediation costs.

Purchase and Sale Agreements

On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties. On December 18, 2013, we completed the sale of 12 of the 16 properties.See “Note 12 – Discontinued Operations” for more information.

On October 16, 2013, the Company entered into a purchase and sale agreement to acquire the Hotel Oceana, located in Santa Barbara, California, from an unaffiliated seller for approximately $42,000, including the assumption of $25,250 in mortgage debt.  This transaction is expected to close by the end of first quarter 2014. 

In February 2014, the Company entered into a purchase and sale agreement to sell the Hotel 373, New York, NY to an unaffiliated buyer for a total purchase price of $37,000.  This property was acquired by the Company in June 2007.  Due to the events of this transaction occurring after December 31, 2013, the Company did not classify this property as a discontinued asset as of December 31, 2013, and accordingly the operating results have not been reclassified for periods presented.

XML

Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 14 – INCOME TAXES

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 1999. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income to its shareholders. It is the Company’s current intention to adhere to these requirements and maintain the Company’s qualification for taxation as a REIT. As a REIT, the Company generally will not be subject to federal corporate income tax on that portion of its net income that is currently distributed to shareholders. If the Company fails to qualify for taxation as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.

Taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. 44 New England is subject to income taxes at the applicable federal, state and local tax rates.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income from continuing operations as a result of the following differences:

		For the year ended December 31,
		2013		2012		2011
Statutory federal income tax provision	$	5,152	$	1,409	$	34
Adjustment for nontaxable loss		(7,472)		(623)		(6,170)
State income taxes, net of federal income tax effect		(1,317)		151		(1,146)
Recognition of deferred tax assets		(1,963)		-		-
Changes in valuation allowance		-		(4,292)		7,282
Total income tax benefit	$	(5,600)	$	(3,355)	$	-

The components of the Company’s income tax expense (benefit) from continuing operations for the years ended December 31, 2013, 2012 and 2011 were as follows:

		For the year ended December 31,
		2013		2012		2011
Income tax expense (benefit):
Current:
Federal	$	-	$	-	$	-
State		-		229		-
Deferred:
Federal		(3,604)		(3,584)		-
State		(1,996)		-		-
Total	$	(5,600)	$	(3,355)	$	-
Income tax expense (benefit):
From continuing operations		(5,600)		(3,355)		-
From discontinued operations		190		-		-
Total	$	(5,410)	$	(3,355)	$	-

NOTE 14 – INCOME TAXES (CONTINUED)

The components of consolidated TRS’s net deferred tax asset as of December 31, 2013 and 2012 were as follows:

		As of December 31,
		2013		2012
Deferred tax assets:
Net operating loss carryforwards	$	8,605	$	4,234
Accrued expenses and other		685		(75)
Tax credit carryforwards		280		-
Net deferred tax assets		9,570		4,159
Valuation allowance		(804)		(804)
Deferred tax assets	$	8,766	$	3,355

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on limitations related to the utilization of certain tax attribute carryforwards, Management recorded a valuation allowance of approximately $804 as these attributes are not more likely than not to be realized prior to their expiration. Based on the level of historical taxable income, tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible, Management believes it is more likely than not that the remaining deferred tax assets will be realized.

As of December 31, 2013, we have gross federal net operating loss carryforwards of $21,798which expire over various periods from 2023 through 2033.As of December 31, 2013, we have gross state net operating loss carryforwards of $22,210 which expire over various periods from 2014 to 2033.  The Company has tax credits of $280 available which begin to expire in 2028. 

Earnings and profits, which will determine the taxability of distributions to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the estimated useful lives and methods used to compute depreciation. The following table sets forth certain per share information regarding the Company’s common and preferred share distributions for the years ended December 31, 2013, 2012 and 2011.

	2013	2012	2011
Preferred Shares - 8% Series A
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 8% Series B
Ordinary income	100.00%	100.00%	100.00%
Return of Capital	0.00%	0.00%	0.00%
Capital Gain Distribution	0.00%	0.00%	0.00%
Preferred Shares - 6.875% Series C
Ordinary income	100.00%	N/A	N/A
Return of Capital	0.00%	N/A	N/A
Capital Gain Distribution	0.00%	N/A	N/A
Common Shares - Class A
Ordinary income	45.15%	1.28%	73.30%
Return of Capital	54.85%	98.72%	26.70%
Capital Gain Distribution	0.00%	0.00%	0.00%

XML

Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 10 – EARNINGS PER SHARE

The following table is a reconciliation of the income or loss (numerator) and the weighted average shares (denominator) used in the calculation of basic and diluted earnings per common share. The computation of basic and diluted earnings per share is presented below.

	Year Ended December 31,
		2013		2012			2011
NUMERATOR:
Basic and Diluted*
Income from Continuing Operations	$	20,753	$	7,498		$	100
Income from Continuing Operations allocated to Noncontrolling Interests		658		703			658
Distributions to Preferred Shareholders		(14,611)		(14,000)			(10,499)
Dividends Paid on Unvested Restricted Shares		(804)		(459)			(229)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Stock		(2,250)		-			-
Income (Loss) from Continuing Operations attributable to Common Shareholders		3,746		(6,258)			(9,970)
Discontinued Operations
Income (Loss) from Discontinued Operations		29,195		14,720			(27,068)
(Income) Loss from Discontinued Operations allocated to Noncontrolling Interests		(993)		(545)			1,076
Income (Loss) from Discontinued Operations attributable to Common Shareholders		28,202		14,175			(25,992)
Net Income (Loss) attributable to Common Shareholders	$	31,948	$	7,917		$	(35,962)
DENOMINATOR:
Weighted average number of common shares - basic		198,390,450		187,415,270			168,753,382
Effect of dilutive securities:
Restricted Stock Awards		2,384,165		-	*		-
Contingently Issued Shares		1,143,562		-	*		-
Weighted average number of common shares - diluted		201,918,177		187,415,270			168,753,382

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

NOTE 10 – EARNINGS PER SHARE (CONTINUED)

The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:

	Year Ended December 31,
	2013	2012	2011
Common Units of Limited Partnership Interest	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding	-	433,097	584,216
Contingently Issuable Share Awards	-	2,778,545	2,097,456
Options to Acquire Common Shares Outstanding	-	275,580	2,360,156
Total potentially dilutive securities excluded from the denominator	6,968,035	10,695,345	12,336,940

XML

Income Taxes (Taxability Of Common And Preferred Share Distributions) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Series A Preferred Shares [Member]
Ordinary income (in hundredths)	100.00%	100.00%	100.00%
Return of Capital (in hundredths)	0.00%	0.00%	0.00%
Capital Gain Distribution (in hundredths)	0.00%	0.00%	0.00%
Series B Preferred Shares [Member]
Ordinary income (in hundredths)	100.00%	100.00%	100.00%
Return of Capital (in hundredths)	0.00%	0.00%	0.00%
Capital Gain Distribution (in hundredths)	0.00%	0.00%	0.00%
Series C Preferred Shares [Member]
Ordinary income (in hundredths)	100.00%
Return of Capital (in hundredths)	0.00%
Capital Gain Distribution (in hundredths)	0.00%
Class A Common Shares [Member]
Ordinary income (in hundredths)	45.15%	1.28%	73.30%
Return of Capital (in hundredths)	54.85%	98.72%	26.70%
Capital Gain Distribution (in hundredths)	0.00%	0.00%	0.00%

XML

Debt

12 Months Ended

Dec. 31, 2013

Debt [Abstract]

Debt

NOTE 6 – DEBT

Mortgages

We had total mortgages payable at December 31, 2013 and December 31, 2012 of $617,788(including $45,835 in outstanding mortgage indebtedness related to assets held for sale)and$641,160, respectively. These balances consisted of mortgages with fixed and variable interest rates, which ranged from 3.79% to 8.25% as of December 31, 2013. Included in these balances are net premiums of $2,466 and$3,245 as of December 31, 2013 and December 31, 2012, respectively, which are amortized over the remaining life of the loans. Aggregate interest expense incurred under the mortgage loans payable totaled $34,854,  $38,343, and $39,786 during the years ended December 31, 2013, 2012, and 2011, respectively.

Our mortgage indebtedness contains various financial and non-financial covenants customarily found in secured, non-recourse financing arrangements. Our mortgage loans payable typically require that specified debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, the lender may be able to escrow cash flow generated by the property securing the applicable mortgage loan. We have determined that certain debt service coverage ratio covenants contained in the loan agreements securing seven of our hotel properties were not met as of December 31, 2013. Pursuant to these loan agreements, the lender has elected to escrow the operating cash flow for a number of these properties. However, these covenants do not constitute an event of default for these loans.

As of December 31, 2013, the maturity dates for the outstanding mortgage loans ranged from October 2014 to February 2018.

Subordinated Notes Payable

We have two junior subordinated notes payable in the aggregate amount of $51,548 to the Hersha Statutory Trusts pursuant to indenture agreements which will mature on July 30, 2035, but may be redeemed at our option, in whole or in part, prior to maturity in accordance with the provisions of the indenture agreements.  The $25,774 notes issued to Hersha Statutory Trust I and Hersha Statutory Trust II, bear interest at a variable rate of LIBOR plus 3% per annum.  This rate resets two business days prior to each quarterly payment.  The weighted average interest rate on our two junior subordinated notes payable during the years ended December 31, 2013, 2012, and 2011 was 3.32%,  3.51%, and 3.35%, respectively.  Interest expense in the amount of $1,712,  $1,810, and $1,727 was recorded for the years ended December 31, 2013, 2012, and 2011, respectively.

Credit Facilities

On November 5, 2012, we entered into a senior unsecured credit agreement with Citigroup Global Markets Inc. and various other lenders. The credit agreement provides for a $400,000 senior unsecured credit facility consisting of a $250,000 senior unsecured revolving line of credit, and a $150,000 senior unsecured term loan. Our previous $250,000senior secured credit facility was terminated and replaced by the $400,000 unsecured credit facility, and, as a result, all amounts outstanding under our $250,000 secured credit facility were repaid with borrowings from our $400,000 unsecured credit facility. The $400,000 unsecured credit facility expires on November 5, 2015, and, provided no event of default has occurred and remains uncured, we may request that the lenders renew the credit facility for two additional one-year periods. The credit facility is also expandable to $550,000 at our request, subject to the satisfaction of certain conditions.

The amount that we can borrow at any given time on our credit facility is governed by certain operating metrics of designated unencumbered hotel properties known as borrowing base assets. As of December 31, 2013, the following hotel properties were borrowing base assets:

- Holiday Inn Express, Cambridge, MA	- Hampton Inn, Philadelphia, PA
- Holiday Inn, Wall Street, NY	- Hampton Inn, Washington, DC
- Holiday Inn Express, Times Square, NY	- Hyatt Place, King of Prussia, PA
- Residence Inn, Norwood, MA	- Nu Hotel, Brooklyn, NY
- Residence Inn, Framingham, MA	- The Rittenhouse Hotel, Philadelphia, PA
- Sheraton, Wilmington South, DE	- The Boxer, Boston, MA
- Sheraton Hotel, JFK Airport, New York, NY	- Holiday Inn Express (Water Street), New York, NY
- Candlewood Suites, Times Square, NY	- Courtyard, San Diego, CA
- Hampton Inn, Times Square, NY	- Residence Inn, Coconut Grove, FL

NOTE 6 – DEBT (CONTINUED)

The interest rate for the $400,000 unsecured credit facility is based on a pricing grid with a range of one month U.S. LIBOR plus 1.75% to 2.65%. As of December 31, 2013, we had borrowed $150,000 in unsecured term loans under the unsecured credit facility, and had entered into interest rate swaps which effectively fix the interest rate on these term loans at a blended rate of3.217%. See “Note 8 – Fair Value Measurements and Derivative Instruments” for more information.

The credit agreement providing for the $400,000 unsecured credit facility includes certain financial covenants and requires that we maintain: (1) a minimum tangible net worth of $1,000,000, which is calculated by adding back accumulated depreciation to the recorded value of our investment in hotel properties and subtracting certain intangible assets and debt and is subject to increases under certain circumstances; (2) annual distributions not to exceed 95% of adjusted funds from operations; and (3) certain financial ratios, including the following:

·a fixed charge coverage ratio of not less than 1.45 to 1.00, which increases to 1.50 to 1.00 as of January 1, 2014;

·a maximum leverage ratio of not more than 60%; and

·a maximum secured debt leverage ratio of 55%, which decreased to 50% as of October 1, 2013 and further decreases to 45% as of October 1, 2014.

The Company is in compliance with each of the covenants listed above as of December 31, 2013. As of December 31, 2013, our remaining borrowing capacity under the new credit facility was $244,175, based on our current borrowing base assets.

As of December 31, 2013, the outstanding unsecured term loan balance under the $400,000 credit facility was $150,000 and we had outstanding borrowings of $0 on the revolving line of credit. As of December 31, 2012, the outstanding unsecured term loan was $100,000 and the revolving line of credit had no balance outstanding.

The Company recorded interest expense of $5,413,  $2,405, and $2,103 related to borrowings drawn on each of the aforementioned credit facilities, for the years ended December 31, 2013, 2012, and 2011, respectively. The weighted average interest rate on our credit facilities was 3.08%,  4.57%, and 4.43% for the years ended December 31, 2013, 2012, and 2011, respectively.

Subsequent to December 31, 2013, the Company has received a commitment from its existing bank group and is in the process of amending the current $400,000 credit facility which would allow the Company to increase the size of the facility while simultaneously extending the tenor and reducing the pricing. The revised credit facility is expected to close by the end of the first quarter of 2014, subject to lender approval.

On November 5, 2010, we entered into a Revolving Credit Loan and Security Agreement with T.D. Bank, NA and various other lenders, which provided for a senior secured revolving credit facility in the principal amount of up to $250,000, including a sub-limit of $25,000 for irrevocable stand-by letters of credit and a $10,000 sub-limit for the swing line loans. The $250,000 revolving credit facility was collateralized by a first lien-security interest in all existing and future unencumbered assets of HHLP, a collateral assignment of all hotel management contracts of the management companies in the event of default, and title-insured, first-lien mortgages on several hotel properties.

Aggregate annual principal payments for the Company’s credit facility and mortgages and subordinated notes payable for the five years following December 31, 2013 and thereafter are as follows:

Year Ending December 31,	Amount
2014	$	17,500
2015		250,188
2016		302,648
2017		181,184
2018		13,802
Thereafter		51,548
Net Unamortized Premium		2,466
	$	819,336

NOTE 6 – DEBT (CONTINUED)

Capitalized Interest

We utilize mortgage debt and our $400,000 revolving credit facility to finance on-going capital improvement projects at our hotels. Interest incurred on mortgages and the revolving credit facility that relates to our capital improvement projects iscapitalized through the date when the assets are placed in service. For the years ended December 31, 2013, 2012, and 2011, we capitalized $1,320,  $1,542, and $1,372 respectively, of interest expense related to these projects.

Deferred Financing Costs

Costs associated with entering into mortgages and notes payable and our revolving line of credit are deferred and amortized over the life of the debt instruments. Amortization of deferred financing costs is recorded in interest expense.   As of December 31, 2013, deferred costs were $7,570, net of accumulated amortization of $7,070. Amortization of deferred costs for the years ended December 31, 2013, 2012, and 2011was $2,886,  $2,991, and$3,535 respectively.

Debt Payoff

On January 3, 2013, we funded an additional $50,000 in unsecured term loan borrowings under our $400,000 unsecured credit facility which was used to pay off the balance of the mortgage loan secured by the Holiday Inn Express, Times Square, New York, NY.  This mortgage was also subject to an interest rate swap, which was terminated as a cash flow hedge as of December 31, 2012 due to this payoff.  As a result of this payoff, we expensed $261 in unamortized deferred financing costs and fees, which are included in the Loss on Debt Extinguishment caption of the consolidated statements of operations for the year ended December 31, 2013.

On June 30, 2013, we repaid $7,928 on our mortgage with Berkadia Commercial Mortgage, LLC for the Residence Inn, Tysons Corner, VA property.  The loan was due to mature in July 2013, and we incurred no loss on debt extinguishment in paying off the loan.

On January 7, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012. Therefore, the accumulated other comprehensive loss on this swap as of December 31, 2012, was reclassified to income and we recorded $530 in the Loss on Debt Extinguishment on the statement of operations for the year ended December 31, 2012.

As previously mentioned, we replaced our previous $250,000 secured credit facility with a new $400,000 unsecured credit facility with Citigroup Global Markets Inc. and various other lenders on November 5, 2012. Concurrently with this closing, we funded $100,000 in unsecured term loan borrowings. These borrowings were used to pay off in full the balance on seven mortgage loans on hotel properties. As a result of terminating our previous $250,000 secured credit facility and extinguishing the debt on these seven properties, we expensed $2,410 in unamortized deferred financing costs and fees, which are included in the Loss of Debt Extinguishment caption on the consolidated statements of operations for the year ended December 31, 2012. On January 3, 2013, we funded an additional $50,000 in unsecured term loan borrowings under our $400,000 unsecured credit facility which were used to payoff the balance of the mortgage loan secured by the Holiday Inn Express, Times Square, New York, NY. This mortgage was also subject to an interest rate swap, which was derecognized as a cash flow hedge as of December 31, 2012 due to this payoff. See “Footnote 8 – Fair Value Measurements and Derivative Instruments” for more information.

New Debt/Refinance

On January, 31, 2014, we paid down $5,175 of the outstanding debt and modified the mortgage loan on the Duane Street Hotel, New York, NY. As a result, we entered into a $9,500 loan with a maturity date of February 1, 2017. The modified loan bears interest at a variable rate of one month U.S. dollar LIBOR plus 4.50%. The modification also includes an interest rate swap, which effectively fixes the interest rate at 5.433%.  As a result of this modification, we anticipate expensing $65 in unamortized deferred financial costs and fees during the first quarter of 2014.  

NOTE 6 – DEBT (CONTINUED)

On April 24, 2013, we modified the $30,000 mortgage loan on the Courtyard by Marriott, Westside, Los Angeles, CA.  The modified loan bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.00%, and matures on September 29, 2017.  The modification also contains an option for the Company to advance $5,000 in principal subject to certain conditions, including there being no event of default and compliance with debt service coverage ratio requirements. As a result of this modification, we incurred a loss on debt extinguishment of $284.  This modification did not change the terms of the interest rate swap that we entered into in 2011, which had effectively fixed the interest at 4.947%, and now effectively fixes the interest at 4.10% through September 29, 2015.  After the maturity date of the swap, the loan will bear interest at the stated variable rate of one-month U.S. dollar LIBOR plus 3.00,  with a LIBOR floor of 0.75%.  See “Note 8 – Fair Value Measurements and Derivative Instruments” for more information.

On January 31, 2012, we repaid outstanding mortgage debt with an original principal balance of $32,500 secured by the Capitol Hill Suites, Washington, D.C., incurring a loss on debt extinguishment of approximately $7and simultaneously entered into a new mortgage obligation of $27,500.  The new mortgage debt bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.25% and matures on February 1, 2015.  On the same date, we entered into an interest rate swap that effectively fixes the interest at 3.79% per annum.

On May 9, 2012, we repaid outstanding mortgage debt with a principal balance of $29,730 secured by the Courtyard by Marriott, Miami, FL.  On July 2, 2012, we entered into a new mortgage with an initial obligation of $45,000, with three additional draws of $5,000 every 90 days to fund the construction of the new oceanfront tower as described in “Note 2 – Investment in Hotel Properties”.  The new mortgage debt bears interest at a variable rate of one month U.S. LIBOR plus 3.50% and matures on July 1, 2016.  Also on July 2, 2012, we entered into an interest rate cap that effectively limits interest to 4.32% per annum.

On May 23, 2012, we repaid outstanding mortgage debt with an original principal balance of $22,000 secured by the Hotel 373, Fifth Avenue, NY, and on May 24, 2012 entered into a new mortgage obligation of $19,000, incurring a loss on debt extinguishment of approximately $66.  The new mortgage debt bears interest at a variable rate of one month U.S. dollar LIBOR plus 3.85% and matures on June 1, 2017.  In conjunction with this refinance, we entered into an interest rate cap  that matures on June 1, 2015 that effectively limits interest to 5.85% per annum.

As a result of our acquisition of Metro 29th, first mortgage debt with a principal balance of $54,602 secured by the Holiday Inn Express, New York, NY is included on our consolidated balance sheet.  This debt bears interest at a fixed rate of 6.50% and matures on November 5, 2016.  In addition, we consolidated mezzanine debt with a principal balance of $15,000.  We repaid this mezzanine debt on June 29, 2012 and incurred a loss on debt extinguishment of approximately $176.

XML

Other Assets And Deposits On Hotel Acquisitions (Other Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Assets And Deposits On Hotel Acquisitions [Abstract]
Transaction Costs	$ 115	$ 339
Acquisition of Hyatt Union Square		3,120
Investment in Statutory Trusts	1,548	1,548
Prepaid Expenses	9,256	8,654
Insurance Claims Receivable	1,706	3,883
Deferred Tax Asset, Net of Valuation Allowance of $804	8,766	3,355
Other	6,069	4,615
Total Other Assets	27,460	25,514
Valuation allowance	$ 804	$ 804

XML

Development Loans Receivable

12 Months Ended

Dec. 31, 2013

Development Loans Receivable [Abstract]

Development Loans Receivable

NOTE 4 – DEVELOPMENT LOANS RECEIVABLE

Development Loans

Historically, we provided first mortgage and mezzanine loans to hotel developers. These loans were initially originated as part of our acquisition strategy. During the years ended December 31, 2013 and 2012, no such loans were originated by us. Interest income from development loans was $158, $1,998, and $3,427for the years ended December 31, 2013, 2012, and 2011, respectively. No interest accrued on development loans in 2013. Accrued interest on our development loans receivable was $348 as of December 31, 2012.

As of December 31, 2013 we had no development loans outstanding and as of December 31, 2012, our development loans receivable consisted of the following:

Hotel Property	Borrower		Principal Outstanding December 31, 2013		Principal Outstanding December 31, 2012	Interest Rate		Maturity Date
Operational Hotels
Hyatt 48Lex - New York, NY*	44 Lexington Holding, LLC	$	-	$	15,122	9%	(1)	N/A
Construction Hotels
Hyatt Union Square - New York, NY (2)	Risingsam Union Square, LLC		-		13,303	10%		N/A
Total Development Loans Receivable		$	-	$	28,425

*Indicates borrower is a related party

(1)Prior to June 1, 2012, the development loan to 44 Lexington Holding LLC allowed the borrower to elect, quarterly, to pay accrued interest in-kind by adding the accrued interest to the principal balance of the loan.  Effective June 1, 2012, we amended the development loan with 44 Lexington Holding LLC to cease the buyer’s election to pay accrued interest in-kind.  Interest of $678 was added to principal during the year ended December 31, 2012.

(2)On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY from Risingsam Union Square, LLC.  Consideration given in exchange for the property including $36,000 paid in cash to the seller and our cancellationof a development loan receivable in the original principal amount of $10,000 and $3,303 of accrued interest on the loan.  In addition, we paid off the existing construction financing and entered into a new mortgage loan.  See “Note 2 –Investment In Hotel Properties” for additional discussion of this transaction.

Advances and repayments on our development loans receivable consisted of the following for the years ended December 31, 2013, 2012, and 2011:

	2013	2012	2011
Balance at January 1,	$          28,425	$          35,747	$           41,653
Interest added to principal	-	678	2,094
Repayments	(15,122)	(8,000)	-
Principal exchanged for interest in hotel properties	(13,303)	-	(8,000)
Balance at December 31,	$                     -	$          28,425	$           35,747

XML

Other Assets And Deposits On Hotel Acquisitions

12 Months Ended

Dec. 31, 2013

Other Assets And Deposits On Hotel Acquisitions [Abstract]

Other Assets And Deposits On Hotel Acquisitions

NOTE 5 – OTHER ASSETS AND DEPOSITS ON HOTEL ACQUISITIONS

Other Assets

Other Assets consisted of the following at December 31, 2013 and December 31, 2012:

	December 31, 2013		December 31, 2012
Transaction Costs	$	115	$	339
Acquisition of Hyatt Union Square		-		3,120
Investment in Statutory Trusts		1,548		1,548
Prepaid Expenses		9,256		8,654
Insurance Claims Receivable		1,706		3,883
Deferred Tax Asset, Net of Valuation Allowance of $804		8,766		3,355
Other		6,069		4,615
	$	27,460	$	25,514

Transaction Costs - Transaction costs include legal fees and other third party transaction costs incurred relative to entering into debt facilities, issuances of equity securities, and other costs which are recorded in other assets prior to the closing of the respective transactions.

Acquisition of Hyatt Union Square - On April 9, 2013, we completed the acquisition of the real property and improvements for the Hyatt Union Square hotel in New York, NY.  Included in the acquisition of Hyatt Union Square above are costs we incurred for preliminary development of the hotel.

Investment in Statutory Trusts - We have an investment in the common stock of Hersha Statutory Trust I and Hersha Statutory Trust II. Our investment is accounted for under the equity method.

Prepaid Expenses - Prepaid expenses include amounts paid for property tax, insurance and other expenditures that will be expensed in the next twelve months.

Insurance Claims Receivable – As noted in “Note 2 – Investment in Hotel Properties,” we recorded an insurance claim receivable due to the property damage that occurred at several of our hotel properties as a result of Hurricane Sandy in October 2012.

Deferred Tax Asset - We have approximately $8,766 of net deferred tax assets as of December  31, 2013. We have considered various factors, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies in determining a valuation allowance for our deferred tax assets, and we believe that it is more likely than not that we will be able to realize the $8,766 of net deferred tax assets in the future.

Deposits on Hotel Acquisitions

As of December 31, 2013, we had $15,486 in interest bearing deposits related to the future acquisition of the Hilton Garden Inn -52nd Street, New York, NY.  On October 24, 2012, we entered into a purchase and sale agreement to acquire the Hilton Garden Inn – 52nd Street in New York, NY for total consideration of $74,000. As of December  31, 2013, we had provided $15,486 to the seller as a deposit earning 10% per annum and we may fund an additional $1,514 deposit earning 10% per annum. The total consideration to the seller will consist of this $17,000 interest bearing deposit, an additional $15,000 cash to be paid to the seller upon closing and the assumption or extinguishment of a mortgage loan secured by the hotel in the original aggregate principal amount of $42,000.  This transaction is expected to close shortly after the developer completes the hotel’s construction, which is anticipated for the first quarter of 2014. While this purchase and sale agreement secures the Company’s right to acquire the completed hotel, the Company is not assuming any significant construction risk, including the risk of schedule and cost overruns.

As of December 31, 2013, we had $3,100 in interest bearing deposits related to the future acquisition of the Hotel Oceana, located in Santa Barbara, California (See “Note 2 – Investment in Hotel Properties” for more information).

NOTE 5 – OTHER ASSETS AND DEPOSITS ON HOTEL ACQUISITIONS (CONTINUED)

As of December 31, 2012, our Deposits on Hotel Acquisitions consisted of $21,000 in non-interest bearing deposits related to the acquisition of the Hyatt Union Square, New York, NY,  $15,000 in interest bearing deposits related to the future acquisition of Hilton Garden Inn -52nd Street, New York, NY and $1,750 in interest bearing deposits related to the potential acquisition of another hotel property.

XML

Commitments And Contingencies And Related Party Transactions

12 Months Ended

Dec. 31, 2013

Commitments And Contingencies And Related Party Transactions [Abstract]

Commitments And Contingencies And Related Party Transactions

NOTE 7 – COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

Management Agreements

Our wholly-owned taxable REIT subsidiary ("TRS"), 44 New England, engages eligible independent contractors in accordance with the requirements for qualification as a REIT under the internal revenue code of 1986, as amended, including HHMLP, as the property managers for hotels it leases from us pursuant to management agreements. HHMLP is owned, in part, by certain executives and trustees of the Company. Our management agreements with HHMLP provide for five-year terms and are subject to early termination upon the occurrence of defaults and certain other events described therein. As required under the REIT qualification rules, HHMLP must qualify as an “eligible independent contractor” during the term of the management agreements. Under the management agreements, HHMLP generally pays the operating expenses of our hotels. All operating expenses or other expenses incurred by HHMLP in performing its authorized duties are reimbursed or borne by our TRS to the extent the operating expenses or other expenses are incurred within the limits of the applicable approved hotel operating budget. HHMLP is not obligated to advance any of its own funds for operating expenses of a hotel or to incur any liability in connection with operating a hotel. Management agreements with other unaffiliated hotel management companies have similar terms.

For its services, HHMLP receives a base management fee and, if a hotel exceeds certain thresholds, an incentive management fee. The base management fee for a hotel is due monthly and is equal to 3% of gross revenues associated with each hotel managed for the related month. The incentive management fee, if any, for a hotel is due annually in arrears on the ninetieth day following the end of each fiscal year and is based upon the financial performance of the hotels. For the years ended December 31, 2013, 2012, and 2011, base management fees incurred totaled $11,713,  $10,781, and $9,190 respectively, and are recorded as Hotel Operating Expenses. For the years ended December 31, 2013, 2012, and 2011, we did not incur incentive management fees.

Franchise Agreements

Our branded hotel properties are operated under franchise agreements assumed by the hotel property lessee. The franchise agreements have 10 to 20 year terms, but may be terminated by either the franchisee or franchisor on certain anniversary dates specified in the agreements. The franchise agreements require annual payments for franchise royalties, reservation, and advertising services, and such payments are based upon percentages of gross room revenue. These payments are paid by the hotels and charged to expense as incurred. Franchise fee expense for the years ended December 31, 2013, 2012, and 2011 were $26,247,  $24,278, and $22,729 respectively, and are recorded in Hotel Operating Expenses. The initial fees incurred to enter into the franchise agreements are amortized over the life of the franchise agreements.

Accounting and Information Technology Fees

Each of the wholly-owned hotels and consolidated joint venture hotel properties managed by HHMLP incurs a monthly accounting and information technology fee. Monthly fees for accounting services are between $2 and $3 per property and monthly information technology fees range from $1 to $2 per property. For the years ended December 31, 2013, 2012, and 2011, the Company incurred accounting fees of $1,739,  $1,741, and $1,822 respectively. For the years ended December 31, 2013, 2012, and 2011, the Company incurred information technology fees of $510,  $509, and $460 respectively. Accounting fees and information technology fees are included in Hotel Operating Expenses.

Capital Expenditure Fees

HHMLP charges a 5% fee on all capital expenditures and pending renovation projects at the properties as compensation for procurement services related to capital expenditures and for project management of renovation projects. For the years ended December 31, 2013, 2012, and 2011, we incurred fees of $1,459,  $1,076, and $1,208 respectively, which were capitalized with the cost of fixed asset additions.

Acquisitions from Affiliates

We have entered into an option agreement with each of our officers and certain trustees such that we obtain a right of first refusal to purchase any hotel owned or developed in the future by these individuals or entities controlled by them at fair market value. This right of first refusal would apply to each party until one year after such party ceases to be an officer or trustee of the Company. Our Acquisition Committee of the Board of Trustees is comprised solely of independent trustees, and the purchase prices and all material terms of the purchase of hotels from related parties are approved by the Acquisition Committee.

NOTE 7 – COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS (CONTINUED)

Hotel Supplies

For the years ended December 31, 2013, 2012, and 2011, we incurred charges for hotel supplies of $222,  $149, and $143 respectively. For the years ended December 31, 2013, 2012, and 2011, we incurred charges for capital expenditure purchases of $19,783,  $11,809, and $18,404 respectively. These purchases were made from Hersha Purchasing and Design, a hotel supply company owned, in part, by certain executives and trustees of the Company. Hotel supplies are expensed and included in Hotel Operating Expenses on our consolidated statements of operations, and capital expenditure purchases are included in investment in hotel properties on our consolidated balance sheets. Approximately $2 and $5 is included in accounts payable at December 31, 2013 and December 31, 2012, respectively.

Due From Related Parties

The due from related parties balance as of December 31, 2013 and December 31, 2012 was approximately $11,124 and $8,488, respectively. The balances primarily consisted of working capital deposits made to Hersha affiliates.

Due to Related Parties

The balance due to related parties as of December 31, 2013 and December 31, 2012 was approximately $4,815 and $4,403, respectively. The balances consisted of amounts payable to HHMLP for administrative, management, and benefit related fees.

Hotel Ground Rent

For the years ended December 31, 2013, 2012, and 2011 we incurred $985,  $835, and $877 respectively, of rent expense payable pursuant to ground leases related to certain hotel properties.

Future minimum lease payments (without reflecting future applicable Consumer Price Index increases) under these agreements are as follows:

Year Ending December 31,		Amount
2014	$	735
2015		735
2016		735
2017		735
2018		735
Thereafter		60,930
	$	64,605

Litigation

We are not presently subject to any material litigation nor, to our knowledge, is any other litigation threatened against us, other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.

XML

Commitments And Contingencies And Related Party Transactions (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Management Agreements [Abstract]
Term of management agreements with HHMLP	5 years
Base management fee as percentage of gross revenues (in hundredths)	3.00%
Base management fees incurred	$ 11,713	$ 10,781	$ 9,190
Franchise Agreements [Abstract]
Terms of franchise agreements, minimum	10 years
Terms of franchise agreements, maximum	20 years
Franchise fee expense	26,247	24,278	22,729
Accounting and Information Technology Fees [Abstract]
Monthly fees for accounting services per property for hotels managed by HHMLP, minimum	2
Monthly fees for accounting services per property for hotels managed by HHMLP, maximum	3
Monthly information technology fees per property for hotels managed by HHMLP, minimum	1
Monthly information technology fees per property for hotels managed by HHMLP, maximum	2
Accounting fees	1,739	1,741	1,822
Information technology fees	510	509	460
Capital Expenditure Fees [Abstract]
Fee on all capital expenditures and pending renovation projects at the properties (in hundredths)	5.00%
Fees incurred on capital expenditures	1,459	1,076	1,208
Acquisitions From Affiliates [Abstract]
Period of right of first refusal per option agreement with officers and affiliated trustees after termination	1 year
Hotel Supplies [Abstract]
Hotel supplies	222	149	143
Charges for capital expenditure purchases	19,783	11,809	18,404
Capital expenditures included in accounts payable	2	5
Due From Related Parties [Abstract]
Due from related parties	11,124	8,488
Due to Related Parties [Abstract]
Due to related parties	4,815	4,403
Hotel Ground Rent [Abstract]
Rent expense related to ground leases	$ 985	$ 835	$ 877

XML

Selected Quarterly Financial Data (Unaudited) (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012
Selected Quarterly Financial Information [Abstract]
Gain on Disposition of Hotel Properties	$ 1,950	$ 1,161	$ 25,131

XML

Fair Value Measurements And Derivative Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended									12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Interest Rate Cap Hyatt Union Square, New York, NY [Member]	Apr. 09, 2013 Interest Rate Cap Hyatt Union Square, New York, NY [Member]	Dec. 31, 2013 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Dec. 31, 2012 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Dec. 31, 2013 Estimate of Fair Value, Fair Value Disclosure [Member]	Dec. 31, 2012 Estimate of Fair Value, Fair Value Disclosure [Member]	Dec. 31, 2013 Holiday Inn Express Camp Springs, MD [Member]	Dec. 31, 2013 Non-core Hotel Properties [Member]
Derivatives, Fair Value [Line Items]
Index: Basis spread on variable rate basis (in hundredths)				4.19%	2.00%
Notional amount				$ 55,000	$ 55,000
Maturity Date				Apr. 09, 2016
Unrealized gain (loss) recognized in accumulated other comprehensive income	1,410	(635)	(813)
Unrealized gain (loss) reclassified from accumulated other comprehensive income to interest expense	1,284
Gain (loss) to be reclassified to interest expense during next 12 months	1,227
Carrying value and estimated fair value of debt						819,336	792,708	828,974	814,451
Impairment of Discontinued Assets	$ 10,314		$ 30,248							$ 3,723	$ 6,591

XML

Debt (Aggregate Annual Principal Payments For Mortgages And Notes Payable) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Debt [Abstract]
2014	$ 17,500
2015	250,188
2016	302,648
2017	181,184
2018	13,802
Thereafter	51,548
Net Unamortized Premium	2,466
Long-term Debt, Total	$ 819,336

XML

Fair Value Measurements And Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Measurements And Derivative Instruments [Abstract]

Fair Value Of Interest Rate Swaps And Caps

								Estimated Fair Value
Hedged Debt	Type	Strike Rate	Index	Effective Date	Maturity Date		Notional Amount		December 31, 2013		December 31, 2012
Holiday Inn Express Times Square, New York, NY*	Swap	1.240%	1-Month LIBOR + 4.00%	May 31, 2011	June 1, 2014	$	-	$	-	$	(530)
Courtyard, LA Westside, Culver City, LA	Swap	1.097%	1-Month LIBOR + 3.85%	September 29, 2011	September 29, 2015		30,000		(374)		(559)
Capitol Hill Hotel, Washington, DC	Swap	0.540%	1-Month LIBOR + 3.25%	February 1, 2012	February 1, 2015		27,119		(88)		(143)
Hotel 373, New York, NY	Cap	2.000%	1-Month LIBOR + 3.85%	May 24, 2012	June 1, 2015		18,477		1		6
Courtyard, Miami, FL	Swap	0.820%	1-Month LIBOR + 3.50%	July 2, 2012	July 1, 2016		60,000		(354)		(658)
Subordinated Notes Payable	Cap	2.000%	1-Month LIBOR + 3.00%	July 30, 2012	July 30, 2014		51,548		-		-
Unsecured Term Loan	Swap	0.545%	1-Month LIBOR + 2.40%	November 5, 2012	November 5, 2016		100,000		430		(135)
Unsecured Term Loan	Swap	0.600%	1-Month LIBOR + 2.40%	December 18, 2012	November 5, 2016		50,000		137		(167)
Hyatt, Union Square, New York, NY	Cap	2.000%	1-Month LIBOR + 4.19%	April 9, 2013	April 9, 2016		55,000		76		-
								$	(172)	$	(2,186)

*On January 3, 2013, the Company repaid the mortgage secured by the Holiday Inn Express Times Square in New York, NY and paid $565 to settle its obligation under the swap. Due to the timing of this transaction, the hedge relationship on our interest rate swap was derecognized as of December 31, 2012.

XML

Investment In Unconsolidated Joint Ventures (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	12 Months Ended		12 Months Ended										12 Months Ended
	Aug. 15, 2011 agreement	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Marriott, Hartford, CT [Member]	Dec. 31, 2013 Hilton, Hartford, CT [Member]	Dec. 31, 2013 Marriott, Mystic, CT And Courtyard, Norwich, CT [Member] property	Dec. 31, 2013 All Hotel Properties Except Hartford Marriot [Member]	Dec. 31, 2013 Mystic Partners, LLC [Member] Courtyard, Norwich, CT [Member] property	Dec. 31, 2013 Mystic Partners, LLC [Member] Hilton and Marriott branded hotels in CT and RI [Member]	Dec. 31, 2012 Inn American Hospitality at Ewing, LLC [Member	Dec. 31, 2012 Metro 29th Street Associates, LLC [Member]	Dec. 31, 2011 Hiren Boston, LLC [Member]	Dec. 31, 2012 Hiren Boston, LLC [Member]	Dec. 31, 2011 Non-core Hotel Properties [Member]	Dec. 18, 2013 Non-core Hotel Properties [Member] property	Sep. 20, 2013 Non-core Hotel Properties [Member] property	May 08, 2012 Non-core Hotel Properties [Member] property	Feb. 23, 2012 Non-core Hotel Properties [Member] property	Aug. 15, 2011 Non-core Hotel Properties [Member] agreement property	May 08, 2012 Non-core Hotel Properties of Unconsolidated Joint Venture [Member] property	Feb. 23, 2012 Non-core Hotel Properties of Unconsolidated Joint Venture [Member] property	Aug. 15, 2011 Non-core Hotel Properties of Unconsolidated Joint Venture [Member] property
Investments in Unconsolidated Joint Ventures [Line Items]
Impairment loss								$ 1,813
Number of Real Estate Properties						2		1							12	16	4		18			4
Investment in hotel properties		1,535,835	1,466,713					0
Percentage of interest acquired										50.00%	50.00%
Loss on conversion from equity method investment to subsidiary										1,668	224
Number of purchase and sale agreements	2																		2
Sales closed on hotel properties																		14		1	3	4
Impairment loss related to purchase and sales agreements	1,677													30,248
Business acquisition, mortgage debt assumed, principal balance													13,750
Gain (loss) on investment in Consolidated Subsidiary												2,757
Preferred units, dividend rate, percentage (in hundredths)									8.50%
Preferred Return Terms		The Mystic Partners, LLC joint venture agreement provides for an 8.5% non-cumulative preferred return based on our contributed equity interest in the venture. Cash distributions will be made from cash available for distribution, first, to us to provide an 8.5% annual non-compounded return on our unreturned capital contributions and then to our joint venture partner to provide an 8.5% annual non-compounded return of their unreturned contributions. Any remaining cash available for distribution will be distributed to us 10.5% with respect to the net cash flow from the Hartford Marriott, 7.0% with respect to the Hartford Hilton and 56.7%, with respect to the remaining two properties. Mystic Partners, LLC allocates income to us and our joint venture partner consistent with the allocation of cash distributions in accordance with the joint venture agreements.
Joint Venture cash distribution percentage				10.50%	7.00%	56.70%
Fees for asset management services as percentage of operating revenues (in hundredths)				0.25%			1.00%
Face amount of loan under performance guarantee				$ 50,000	$ 27,000

XML

Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations [Abstract]

Discontinued Operations

NOTE 12 – DISCONTINUED OPERATIONS

The operating results of certain real estate assets which have been sold or otherwise qualify as held for sale are included in discontinued operations in the statements of operations for all periods presented.

Assets Held for Sale

Assets held for sale or liabilities related to assets held for sale consisted of the following as of December 31, 2013:

	December 31, 2013
Land	$	9,517
Buildings and Improvements		58,129
Furniture, Fixtures and Equipment		9,198
		76,844
Less Accumulated Depreciation & Amortization		(20,261)
Assets Held for Sale	$	56,583
Liabilities Related to Assets Held for Sale	$	45,835

The following table sets forth the components of discontinued operations for the years ended December 31, 2013, 2012, and 2011:

	Year Ended December 31,
		2013		2012		2011
Revenue:
Hotel Operating Revenues	$	58,045	$	63,465	$	96,901
Other Revenue		-		11		55
Total Revenues		58,045		63,476		96,956
Expenses:
Hotel Operating Expenses		35,158		39,046		60,288
Hotel Ground Rent		-		72		433
Real Estate and Personal Property Taxes and Property Insurance		3,316		3,636		5,460
General and Administrative		36		27		597
Acquisition and Termination Transaction Costs		-		8		(17)
Depreciation and Amortization		7,050		9,148		15,142
Interest Expense		4,863		7,872		12,817
Other Expense		44		10		4
Loss on Debt Extinguishment		-		168		43
Income Tax Expense		190		-		-
Total Expenses		50,657		59,987		94,767
Income from Discontinued Operations	$	7,388	$	3,489	$	2,189

We allocate to income or loss from discontinued operations interest expense related to debt that is to be assumed or that is required to be repaid as a result of the disposal transaction.

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

Disposed Assets

Hotel	Acquisition Date	Disposition Date		Consideration		Gain on Disposition
Non-Core Portfolio II (12)	January 1999 - July 2010	December 2013	$	158,600	$	31,559	(1)
Holiday Inn Express, Camp Springs, MD	June 2008	September 2013		8,500		120
Comfort Inn, Harrisburg, PA	January 1999	June 2013		3,700		442
2013 Total						32,121
Non-Core Hotel Portfolio (18)	January 1999 - July 2007	February 2012 & May 2012	$	155,000	$	4,978	(2)
Land Parcel, Eighth Ave, Manhattan, NY	June 2006	April 2012		19,250		5,037
Comfort Inn, North Dartmouth, MA	May 2006	March 2012		-		1,216	(3)
2012 Total					$	11,231
Comfort Inn, West Hanover, PA	May 1998	July 2011	$	5,250	$	949
Land Parcel,  Nevins Street, Brooklyn, NY	June 2007	December 2011		4,500		42
2011 Total					$	991

(1) In September 2013, our Board of Trustees authorized management of the Company to sell this portfolio. On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties, for an aggregate purchase price of approximately $217,000.  The 16 non-core hotel properties in the portfolio were acquired by the Company between 1999 and 2010. We recorded an impairment loss of approximately $6,591 for those assets for which the anticipated net proceeds do not exceed the carrying value.

On December 20, 2013, the Company closed on the sale of 12 of these non-core hotel properties.  As a result of entering into these purchase and sale agreements for the 16 non-core assets mentioned above, the operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2013, 2012, and 2011.  The 12 assets were sold for a total sales price of $158,600, reduced the Company’s consolidated mortgage debt by $33,044 and generated a gain on sale of approximately $31,559.   In February 2014, the remaining 4 assets were sold for a total sales price of $58,400 and reduced the Company’s consolidated mortgage debt by $45,710.

(2) In May 2011, our Board of Trustees authorized management of the Company to sell this portfolio.  On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture, for an aggregate purchase price of approximately $155,000.  The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006.  As a result of entering into these purchase and sale agreements for the 18 non-core assets mentioned above, we recorded an impairment loss in 2011 of approximately $30,248 for those consolidated assets for which the anticipated net proceeds did not exceed the carrying value.

On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three hotel properties owned in part by the Company through an unconsolidated joint venture, and closed on the remaining 4 properties, on May 8, 2012, including one hotel property owned in part by the Company through an unconsolidated joint venture.  The operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2012 and 2011.  The 18 assets were sold for a total sales price of $155,000, reduced the Company’s consolidated mortgage debt by $61,298 and generated a gain on sale of approximately $4,910.   

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

(3) On March 30, 2012, we transferred the title to the Comfort Inn, located in North Dartmouth, to the lender.  Previously, we had ceased operations at this property on March 31, 2011.  The operating results were reclassified to discontinued operations in the statements of operations for the years ended December 31, 2012 and 2011.  The transfer of the title resulted in a gain of approximately $1,216, since the outstanding mortgage loan payable exceeded the net book value of the property.  

XML

Organization And Summary Of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Organization And Summary Of Significant Accounting Policies [Abstract]

Collaborative Arrangement, Accounting Policy

Hersha Hospitality Trust (“we” or the “Company”) was formed in May 1998 as a self-administered, Maryland real estate investment trust. We have elected to be taxed and expect to continue to elect to be taxed as a real estate investment trust, or REIT, for federal income tax purposes.

The Company owns a controlling general partnership interest in Hersha Hospitality Limited Partnership (“HHLP” or the “Partnership”), which owns a 99% limited partnership interest in various subsidiary partnerships. Hersha Hospitality, LLC (“HHLLC”), a Virginia limited liability company, owns a 1% general partnership interest in the subsidiary partnerships and the Partnership is the sole member of HHLLC.

The Partnership owns a taxable REIT subsidiary (“TRS”), 44 New England Management Company (“44 New England” or “TRS Lessee”), which leases certain of the Company’s hotels.

Hersha’s common shares of beneficial interest trade on the New York Stock Exchange (“the NYSE”) under the ticker symbol "HT", its 8.0% Series B preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR B” and its 6.875% Series C preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR C.”

As of December 31, 2013, the Company, through the Partnership and subsidiary partnerships, wholly owned 48 limited and full service hotels. All of the wholly owned hotel facilities are leased to the Company’s TRS, 44 New England.

In addition to the wholly owned hotel properties, as of December 31, 2013, the Company owned joint venture interests in another sixproperties. The properties owned by the joint ventures are leased to a TRS owned by the joint venture or to an entity owned by the joint venture partners and 44 New England. The following table lists the properties owned by these joint ventures:

Joint Venture	Ownership	Property	Location	Lessee/Sublessee
Unconsolidated Joint Ventures
Mystic Partners, LLC	66.7%	Marriott	Mystic, CT	Mystic Partners Leaseco, LLC
	8.8%	Hilton	Hartford, CT	Mystic Partners Leaseco, LLC
	66.7%	Courtyard	Norwich, CT	Mystic Partners Leaseco, LLC
	15.0%	Marriott	Hartford, CT	Mystic Partners Leaseco, LLC
SB Partners, LLC	50.0%	Holiday Inn Express	South Boston, MA	South Bay Sandeep, LLC
Hiren Boston, LLC	50.0%	Courtyard	South Boston, MA	South Bay Boston, LLC

Mystic Partners, LLC owns an interest in four hotel properties. Our interest in Mystic Partners, LLC is relative to our interest in each of the four properties owned by the joint venture as defined in the joint venture’s governing documents. Each of the four properties owned by Mystic Partners, LLC is leased to a separate entity that is consolidated in Mystic Partners Leaseco, LLC which is owned by 44 New England and our joint venture partner in Mystic Partners, LLC.

The properties are managed by eligible independent management companies, including Hersha Hospitality Management, LP (“HHMLP”). HHMLP is owned in part by certain of our trustees and executive officers and other unaffiliated third party investors.

Principles Of Consolidation And Presentation

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned TRS Lessee. All significant inter-company amounts have been eliminated.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Consolidated properties are either wholly owned or owned less than 100% by the Partnership and are controlled by the Company as general partner of the Partnership. Properties owned in joint ventures are also consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (VIE) or we maintain control of the asset through our voting interest in the entity. Control can be demonstrated when the general partner has the power to impact the economic performance of the partnership, which includes the ability of the general partner to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the limited partners and the inability of the limited partners to replace the general partner. Control can be demonstrated by the limited partners if the limited partners have the right to dissolve or liquidate the partnership or otherwise remove the general partner without cause or have rights to participate in the significant decisions made in the ordinary course of the partnership’s business.

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines of consolidation. Entities are consolidated if the determination is made that we are the primary beneficiary in a VIE or we maintain control of the asset through our voting interest or other rights in the operation of the entity. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. Based on our examination, the following entities were determined to be VIE’s: Mystic Partners, LLC; Mystic Partners Leaseco, LLC; South Bay Boston, LLC; Brisam Management DE, LLC; Hersha Statutory Trust I; and Hersha Statutory Trust II. Mystic Partners, LLC is a VIE entity, however because we are not the primary beneficiary it is not consolidated by the Company. Our maximum exposure to losses due to our investment in Mystic Partners, LLC is limited to our investment in the joint venture which is $6,210 as of December 31, 2013. Also, Mystic Partners Leaseco, LLC; and South Bay Boston, LLC lease hotel properties from our joint venture interests and are VIEs. These entities are consolidated by the lessors, the primary beneficiaries of each entity. Brisam Management DE, LLC is consolidated in our financial statements, as we are considered to be the primary beneficiary. Hersha Statutory Trust I and Hersha Statutory Trust II are VIEs but HHLP is not the primary beneficiary in these entities. Accordingly, the accounts of Hersha Statutory Trust I and Hersha Statutory Trust II are not consolidated with and into HHLP.

We allocate resources and assess operating performance based on individual hotels and consider each one of our hotels to be an operating segment. All of our individual operating segments meet the aggregation criteria. All of our other real estate investment activities are immaterial and meet the aggregation criteria, and thus, we report one segment: investment in hotel properties.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (US GAAP) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Although we believe the assumptions and estimates we made are reasonable and appropriate, as discussed in the applicable sections throughout these Consolidated Financial Statements, different assumptions and estimates could materially impact our reported results. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions and changes in market conditions could impact our future operating results.

Investment In Hotel Properties

Investment in Hotel Properties

The Company allocates the purchase price of hotel properties acquired based on the fair value of the acquired real estate, furniture, fixtures and equipment, and intangible assets and the fair value of liabilities assumed, including debt. The fair value allocations were determined using Level 3 inputs, which are typically unobservable and are based on our own assumptions, as there is little, if any, related market activity. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the following estimated useful lives:

Building and Improvements          7 to 40 Years

Furniture, Fixtures and Equipment2 to 7 Years

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

The Company periodically reviews the carrying value of each hotel to determine if circumstances indicate impairment to the carrying value of the investment in the hotel or that depreciation periods should be modified. If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel. Based on the properties undiscounted future cash flows, the Company will determine if the investment in such hotel is recoverable. If impairment is indicated, an adjustment will be made to reduce the carrying value of the hotel to reflect the hotel at fair value.

We consider a hotel to be held for sale when management and our independent trustees commit to a plan to sell the property, the property is available for sale, management engages in an active program to locate a buyer for the property and it is probable the sale will be completed within a year of the initiation of the plan to sell.

Acquisition-related cost, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the above acquired assets. 

Investment In Unconsolidated Joint Ventures

Investment in Unconsolidated Joint Ventures

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a VIE or our voting interest in a voting interest entity, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliates as they occur rather than as dividends or other distributions are received, limited to the extent of our investment in, advances to and commitments for the investee. Pursuant to our joint venture agreements, allocations of profits and losses of some of our investments in unconsolidated joint ventures may be allocated disproportionately as compared to nominal ownership percentages due to specified preferred return rate thresholds.

The Company periodically reviews the carrying value of its investment in unconsolidated joint ventures to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. When an impairment indicator is present, we will estimate the fair value of the investment. Our estimate of fair value takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. This determination requires significant estimates by management, including the expected cash flows to be generated by the assets owned and operated by the joint venture. To the extent impairment has occurred and the impairment is considered other than temporary, the loss will be measured as the excess of the carrying amount over the fair value of our investment in the unconsolidated joint venture.

Development Loans Receivable

Development Loans Receivable

Historically, the Company provided secured first-mortgage and mezzanine financing to hotel developers. Development loans receivable have been recorded at cost and reviewed for potential impairment on an on-going basis. The Company’s development loans receivable were each secured by various hotel or hotel development properties or partnership interests in hotel or hotel development properties. Historically, we have determined that the borrowers generally were not VIEs, or in the limited instances where we had determine that the borrower was a VIE, our interest did not represent a controlling financial interest. Accordingly, we did not consolidate the operating results of the borrower in our consolidated financial statements. Our evaluation of this determination was made by reviewing the sufficiency of the borrower’s equity at risk, the rights of the borrower, and which party has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. The analysis utilized by the Company in evaluating the development loans receivable involved considerable management judgment and assumptions.

A development loan receivable was considered impaired when it was probable, based on then current information, that the Company would be unable to collect all amounts due according to the loan’s contractual terms. The amount of impairment, if any, was measured by comparing the recorded amount of the loan to the present value of the expected cash flows or the fair value.

Cash And Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand and in banks plus short-term investments with an initial maturity of three months or less when purchased.

Escrow Deposits

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Escrow Deposits

Escrow deposits include reserves for debt service, real estate taxes, and insurance and reserves for furniture, fixtures, and equipment replacements, as required by certain mortgage debt agreement restrictions and provisions.

Hotel Accounts Receivable

Hotel Accounts Receivable

Hotel accounts receivable consists primarily of meeting and banquet room rental and hotel guest receivables. The Company generally does not require collateral. Ongoing credit evaluations are performed and an allowance for potential losses from uncollectible accounts is provided against the portion of accounts receivable that is estimated to be uncollectible.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs are recorded at cost and amortized over the terms of the related indebtedness using the effective interest method.

Due From/To Related Parties

Due from/to Related Parties

Due from/to Related Parties represents current receivables and payables resulting from transactions related to hotel management and project management with affiliated entities. Due from related parties results primarily from advances of shared costs incurred and interest receivable on development loans made to related parties. Due to affiliates results primarily from hotel management and project management fees incurred. Both due to and due from related parties are generally settled within a period not to exceed one year.

Intangible Assets

Intangible Assets and Liabilities

Intangible assets consist of leasehold intangibles for above-market value of in-place leases and deferred franchise fees. The leasehold intangibles are amortized over the remaining lease term. Deferred franchise fees are amortized using the straight-line method over the life of the franchise agreement. 

Intangible liabilities consist of leasehold intangibles for below-market value of in-place leases. The leasehold intangibles are amortized over the remaining lease term. Intangible liabilities are included in the accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets.

Development Project Capitalization

Development Project Capitalization

We have opportunistically engaged in the development and re-development of hotel assets. We capitalize expenditures related to hotel development projects and renovations, including indirect costs such as interest expense, real estate taxes and utilities related to hotel development projects and renovations.

Noncontrolling Interest

Noncontrolling Interest

Noncontrolling interest in the Partnership represents the limited partner’s proportionate share of the equity of the Partnership. Income (loss) is allocated to noncontrolling interest in accordance with the weighted average percentage ownership of the Partnership during the period. At the end of each reporting period the appropriate adjustments to the income (loss) are made based upon the weighted average percentage ownership of the Partnership during the period. Our ownership interest in the Partnership as of December 31, 2013, 2012 and 2011 was 96.7%,  96.5%, and 95.9%, respectively.

We define a noncontrolling interest as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interests are reported on the consolidated balance sheets within equity, but separately from the shareholders’ equity. Revenues, expenses and net income or loss attributable to both the Company and noncontrolling interests are reported on the consolidated statements of operations.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

In accordance with US GAAP, we classify securities that are redeemable for cash or other assets at the option of the holder, or not solely within the control of the issuer, outside of permanent equity in the consolidated balance sheet. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company considers the guidance in US GAAP to evaluate whether the Company controls the actions or events necessary to issue the maximum number of common shares that could be required to be delivered at the time of settlement of the contract.

We classify the noncontrolling interests of our consolidated joint ventures, consolidated variable interest entity, and certain Common Units (“Nonredeemable Common Units”) as equity. The noncontrolling interests of Nonredeemable Common Units totaled $29,523  as of December 31, 2013 and $15,484 as of December 31, 2012. As of December 31, 2013, there were 6,914,716 Nonredeemable Common Units outstanding with a fair market value of $38,515, based on the price per share of our common shares on the NYSE on such date.

In accordance with the partnership agreement of the Partnership, holders of these units may redeem them for cash unless we, in our sole and absolute discretion, elect to issue common shares on a one-for-one basis in lieu of paying cash.

Prior to February 1, 2013, certain Common Units (“Redeemable Common Units”) had been pledged as collateral in connection with a pledge and security agreement entered into by the Company and the holders of the Redeemable Common Units. The redemption feature contained in the pledge and security agreement where the Redeemable Common Units served as collateral contains a provision that could result in a net cash settlement outside of the control of the Company. As a result, prior to February 1, 2013, the Redeemable Common Units were classified in the mezzanine section of the consolidated balance sheets as they do not meet the requirements for equity classification under US GAAP. Effective February 1, 2013, the aforementioned pledge and security agreement is no longer in place and therefore these Common Units will be treated as Nonredeemable Common Units in future filings. The carrying value of the Redeemable Common Units equals the greater of carrying value based on the accumulation of historical cost or the redemption value.  As of December 31, 2013, there were no outstanding Common Units designated as Redeemable Common Units. As of December 31, 2012, the Redeemable Common Units were valued on the consolidated balance sheets at redemption value since the Redeemable Common Units redemption value was greater than historical cost of $11,753.  

Net income or loss attributed to Nonredeemable Common Units and Redeemable Common Units (collectively, “Common Units”), as well as the net income or loss related to the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity, is included in net income or loss in the consolidated statements of operations. Net income or loss attributed to the Common Units and the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity is excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

Shareholders' Equity

Shareholders’ Equity

On February 25, 2013, we completed a public offering of 3,000,0006.875% Series C Cumulative Redeemable Preferred Shares. These shares have a par value of $0.01 per share with a $25.00 liquidation preference per share. Net proceeds of the offering, after deducting the underwriting discount and the offering expenses payable by us, were approximately $72,370.  

We utilized the net proceeds of the offering to redeem all outstanding 8.00% Series A Cumulative Redeemable Preferred Shares on March 28, 2013, and for general corporate purposes.  The Series A Preferred Shares were redeemed at a per share redemption price of $25.00 together with accrued and unpaid dividends to the redemption date for an aggregate per share redemption price of $25.4056.  Dividends ceased accruing on the Series A Preferred Shares on March 28, 2013.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Terms of the Series B and Series C Preferred Shares outstanding at December 31, 2013 and the Series A and Series B Preferred Shares outstanding at December 31, 2012 are summarized as follows:

							Dividend Per Share
	Shares Outstanding						Year Ended December 31,
Series	December 31, 2013	December 31, 2012		Aggregate Liquidation Preference	Distribution Rate		2013		2012		2011
Series A	-	2,400,000	$	60,000	8.000%	$	0.5000	$	2.0000	$	2.0000
Series B	4,600,000	4,600,000	$	115,000	8.000%	$	2.0000	$	2.0000	$	1.2400
Series C	3,000,000	-	$	75,000	6.875%	$	1.4753	$	-	$	-
	7,600,000	7,000,000

On December 20, 2012, our Board of Trustees approved the repurchase of up to an aggregate of $75,000,000 of common stock. The program was extended through December 31, 2014. As of December 31, 2013, we did not repurchase any shares pursuant to the share repurchase program.

On May 8, 2012, we closed on a public offering in which we issued and sold 24,000,000 common shares through several underwriters for net proceeds to us of approximately $128,558. Immediately upon the closing the offering, we contributed all of the net proceeds of the offering to HHLP in exchange for additional Common Units. HHLP used the net proceeds of this offering to reduce some of the indebtedness outstanding under our revolving line of credit facility and for general corporate purposes, including the funding of future acquisitions.

On August 4, 2009, we entered into a purchase agreement with Real Estate Investment Group L.P. (“REIG”), pursuant to which we sold 5,700,000 common shares at a price of $2.50 per share to REIG for gross proceeds of $14,250.  We also granted REIG the option to buy up to an additional 5,700,000 common shares at a price of $3.00 per share, which was exercisable through August 4, 2014. On February 13, 2012, pursuant to the terms of the original option, we called in and canceled the option granted to REIG in exchange for the issuance of 2,521,561 common shares with an aggregate value equal to $13,566. This amount equals the volume weighted average price per common share for the 20 trading days prior to the exercise of the option, less the $3.00 option price, multiplied by the 5,700,000 common shares remaining under the option.

On May 18, 2011, we completed a public offering of 4,600,000 8.00% Series B Cumulative Redeemable Preferred Shares (“Series B Preferred Shares”), liquidation preference $25.00 per share, including 600,000 Series B Preferred Shares subject to an overallotment option exercised by the underwriters. Net proceeds of the offering, less expenses and underwriters commissions, were approximately $110,977. Net proceeds from the offering were used to reduce some of the indebtedness outstanding under our revolving line of credit facility and to fund a portion of the purchase price of Courtyard by Marriott, Westside, Los Angeles, CA, which was acquired on May 19, 2011.

Stock Based Compensation

Stock Based Compensation

We measure the cost of employee service received in exchange for an award of equity instruments based on the grant-date fair value of the award. The compensation cost is amortized on a straight line basis over the period during which an employee is required to provide service in exchange for the award. The compensation cost related to performance awards that are contingent upon market based criteria being met is recorded at the fair value of the award on the date of the grant and amortized over the performance period.

Derivatives And Hedging

Derivatives and Hedging

The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. Interest rate caps designated as cash flow hedges limit the Company’s exposure to increased cash payments due to increases in variable interest rates.

Revenue Recognition

Revenue Recognition

We recognize revenue and expense for all consolidated hotels as hotel operating revenue and hotel operating expense when earned and incurred. These revenues are recorded net of any sales or occupancy taxes collected from our guests. We participate in frequent guest programs sponsored by the brand owners of our hotels and we expense the charges associated with those programs, as incurred.

Interest income on development loan financing is recorded in the period earned based on the interest rate of the loan and outstanding balance during the period. Development loans receivable and accrued interest on the development loans receivable are evaluated to determine if outstanding balances are collectible. Interest is recorded only if it is determined the outstanding loan balance and accrued interest balance are collectible.

Other revenues consist primarily of fees earned for asset management services provided to hotels we own through unconsolidated joint ventures. Fees are earned as a percentage of hotel revenue and are recorded in the period earned to the extent of the noncontrolling interest ownership.

Income Taxes

Income Taxes

The Company qualifies as a REIT under applicable provisions of the Internal Revenue Code, as amended, and intends to continue to qualify as a REIT. In general, under such provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income will not be subject to Federal income tax to the extent of the income which it distributes. Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes due primarily to differences in depreciation of hotel properties for Federal income tax purposes.

Deferred income taxes relate primarily to the TRS Lessee and are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS Lessee and their respective tax bases and for their operating loss and tax credit carry forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation. For the years ended December 31, 2012, 2011 and 2010, the Company did not record any uncertain tax positions. As of December 31, 2013, with few exceptions, the Company is subject to tax examinations by U.S. federal, state, and local income tax authorities for years 2003 through 2013.

Reclassification

Reclassification

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

XML

Investment In Hotel Properties (Condensed Pro Forma Financial Data) (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Investment In Hotel Properties [Abstract]
Pro Forma Total Revenues									$ 353,407,000		$ 331,587,000
Pro Forma Income from Continuing Operations									22,651,000		7,408,000
(Loss) Income from Discontinued Operations									29,195,000		14,720,000
Pro Forma Net Income									51,846,000		22,128,000
Loss allocated to Noncontrolling Interest									271,000		(154,000)
Preferred Distributions	(3,589,000)	(3,589,000)	(3,589,000)	(3,844,000)	(3,500,000)	(3,500,000)	(3,500,000)	(3,500,000)	(14,611,000)		(14,000,000)		(10,499,000)
Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Stock				(2,250,000)					(2,250,000)
Pro Forma Net (Loss) Income applicable to Common Shareholders									$ 35,256,000		$ 7,974,000
Pro Forma Income applicable to Common Shareholders: Basic									$ 0.18		$ 0.04
Pro Forma Income applicable to Common Shareholders: Diluted									$ 0.18		$ 0.04
Weighted Average Common Shares Outstanding: Basic	198,994,277	198,878,496	198,633,051	197,029,017	196,411,729	196,360,325	186,264,437	170,427,428	198,390,450		187,415,270		168,753,382
Weighted Average Common Shares Outstanding: Diluted	198,994,277	201,644,633	201,201,337	197,029,017	199,593,648	196,360,325	189,011,990	170,427,428	201,918,177	[1]	187,415,270	[1]	168,753,382	[1]

[1] Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

XML

Organization And Summary Of Significant Accounting Policies (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended							12 Months Ended		12 Months Ended		1 Months Ended	12 Months Ended			0 Months Ended		12 Months Ended
	Mar. 08, 2012	Dec. 31, 2013 segment property	Dec. 31, 2011	Mar. 28, 2013	Dec. 31, 2012	Aug. 04, 2009	Dec. 31, 2013 Noncontrolling Interests Common Units [Member]	Dec. 31, 2012 Noncontrolling Interests Common Units [Member]	Dec. 31, 2013 Series A Preferred Stock [Member]	Mar. 28, 2013 Series A Preferred Stock [Member]	Dec. 31, 2013 Series B Preferred [Member}	Dec. 31, 2013 Series B Preferred [Member} Preferred Shares [Member]	Feb. 25, 2013 Series C Preferred [Member]	Dec. 31, 2013 Series C Preferred [Member]	Dec. 31, 2013 Joint Venture [Member] property	Dec. 31, 2013 Mystic Partners, LLC [Member] property	Feb. 13, 2012 Option to Real Estate Investment Group L.P. [Member]	Aug. 04, 2009 Option to Real Estate Investment Group L.P. [Member]	Dec. 31, 2009 Private Placement Real Estate Investment Group L.P. [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Various subsidiary limited partnership interest (in hundredths)		99.00%
General partnership interest (in hundredths)		1.00%
Preferred stock, dividend rate, percentage (in hundredths)									8.00%		8.00%			6.875%
Number of hotel properties (in hotels)		48													6	4
Our maximum exposure to losses due to our investment in Mystic Partners, LLC		$ 6,210
Number of hotels in each reporting sements		1
Related party dues, settlement, period		1 year
Weighted average ownership percentage in the Partnership (in hundredths)		96.70%	95.90%		96.50%
Noncontrolling interests in Nonredeemable Common Units		29,523			15,484
Nonredeemable common units outstanding (in shares)							6,914,716
Fair market value of nonredeemable common units							38,515
Historical cost of Redeemable Common Units outstanding								11,753
Number of shares authorized to repurchase (in shares)					75,000,000
Common shares sold (in shares)	24,000,000												3,000,000
Preferred Shares - Par Value (in dollars per share)														$ 0.01
Proceeds from issuance of preferred stock, net		72,370	110,977										72,370
Preferred Stock, Redemption Price (in dollars per share)				$ 25.4056						$ 25.00
Net proceeds	$ 128,558											$ 110,977					$ 13,566		$ 14,250
Option granted to REIG to buy additional shares (in shares)																		5,700,000
Offering price per share (in dollars per share)						2.50
Option price (in dollars per share)																		$ 3.00
Option terms		We also granted REIG the option to buy up to an additional 5,700,000 common shares at a price of $3.00 per share, which was exercisable through August 4, 2014. On February 13, 2012, pursuant to the terms of the original option, we called in and canceled the option granted to REIG in exchange for the issuance of 2,521,561 common shares with an aggregate value equal to $13,566. This amount equals the volume weighted average price per common share for the 20 trading days prior to the exercise of the option, less the $3.00 option price, multiplied by the 5,700,000 common shares remaining under the option.
Common shares issued to REIG (in shares)																	2,521,561
Consecutive trading days above threshold price for canceling option to purchase common shares (in days)																	20 days
Preferred shares sold (in shares)												4,600,000
Preferred shares, liquidation preference (in dollars per share)		$ 25			$ 25							$ 25.00		$ 25.00
Preferred Shares subject to an overallotment option exercised by the underwriters (in shares)												600,000
Distribution of REIT taxable income to shareholders' (in hundredths)		90.00%
Recognize a tax benefit from an uncertain tax position (in hundredths)		50.00%

XML

Consolidated Statement Of Operations (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Potentially dilutive securities that have been excluded from earnings per share:
Share Based Payments	$ 9,746	$ 9,678	$ 7,590
Potentially Dilutive Securities Excluded from the Denominator	6,968,035	10,695,345	12,336,940
Common Units of Limited Partnership Interest [Member]
Potentially dilutive securities that have been excluded from earnings per share:
Potentially Dilutive Securities Excluded from the Denominator	6,968,035	7,208,123	7,295,112
Unvested Stock Awards Outstanding [Member]
Potentially dilutive securities that have been excluded from earnings per share:
Potentially Dilutive Securities Excluded from the Denominator		433,097	584,216
Contingently Issuable Share Awards [Member]
Potentially dilutive securities that have been excluded from earnings per share:
Potentially Dilutive Securities Excluded from the Denominator		2,778,545	2,097,456
Options To Acquire Common Shares Outstanding [Member]
Potentially dilutive securities that have been excluded from earnings per share:
Potentially Dilutive Securities Excluded from the Denominator		275,580	2,360,156

XML

Schedule III - Real Estate And Accumulated Depreciation (Real Estate And Accumulated Depreciation) (Details) (USD $) In Thousands, unless otherwise specified										12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2013 Hotel [Member]		Dec. 31, 2013 Assets Held-for-sale [Member]		Dec. 31, 2013 Residence Inn, Framingham, MA [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, New York, NY [Member] Hotel [Member]		Dec. 31, 2013 Residence Inn, Greenbelt, MD [Member] Hotel [Member]		Dec. 31, 2013 Courtyard, Brookline, MA [Member] Hotel [Member]		Dec. 31, 2013 Residence Inn, Tyson's Corner, VA [Member] Hotel [Member]		Dec. 31, 2013 Hilton Garden Inn, JFK Airport, NY [Member] Hotel [Member]		Dec. 31, 2013 Hawthorne Suites, Franklin, MA [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Exp, Cambridge, MA [Member] Hotel [Member]		Dec. 31, 2013 Residence Inn, Norwood, MA [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, Chelsea, NY [Member] Hotel [Member]		Dec. 31, 2013 Hyatt House, Gaithersburg, MD [Member] Hotel [Member]		Dec. 31, 2013 Hyatt House, Pleasant Hills, CA [Member] Hotel [Member]		Dec. 31, 2013 Hyatt House, Pleasanton, CA [Member] Hotel [Member]		Dec. 31, 2013 Hyatt House, Scottsdale, AZ [Member] Hotel [Member]		Dec. 31, 2013 Hyatt House, White Plains, NY [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Exp & Suites, Chester, NY [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, Seaport, NY [Member] Hotel [Member]		Dec. 31, 2013 Hotel 373-5th Ave, New York, NY [Member] Hotel [Member]		Dec. 31, 2013 Sheraton Hotel, JFK Airport, NY [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, Philadelphia, PA [Member] Hotel [Member]		Dec. 31, 2013 Duane Street, Tribeca, NY [Member] Hotel [Member]		Dec. 31, 2013 NU Hotel, Brooklyn, NY [Member] Hotel [Member]		Dec. 31, 2013 Hilton Garden Inn, Tribeca, NY [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, Times Square, NY [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Express, Times Square, NY [Member] Hotel [Member]		Dec. 31, 2013 Candlewood Suites, Times Square, NY [Member] Hotel [Member]		Dec. 31, 2013 Hyatt Place, KOP, PA [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Express, Wall Street, NY [Member] Hotel [Member]		Dec. 31, 2013 Hampton Inn, Washington, DC [Member] Hotel [Member]		Dec. 31, 2013 Courtyard Inn, Alexandria, VA [Member] Hotel [Member]		Dec. 31, 2013 Sheraton, Wilmington South, DE [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn, Water Street, NY [Member] Hotel [Member]		Dec. 31, 2013 Capital Hill Suites, Washington, DC [Member] Hotel [Member]		Dec. 31, 2013 Courtyard, LA Westside, CA [Member] Hotel [Member]		Dec. 31, 2013 Courtyard, Miami, FL [Member] Hotel [Member]		Dec. 31, 2013 The Rittenhouse Hotel, Philadelphia, PA [Member] Hotel [Member]		Dec. 31, 2013 The Boxer, Boston, MA [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Express, Manhattan, NY [Member] Hotel [Member]		Dec. 31, 2013 Hyatt Union Square, New York, NY [Member] Hotel [Member]		Dec. 31, 2013 Courtyard By Marriott, San Deigo, CA [Member] Hotel [Member]		Dec. 31, 2013 Residence Inn, Coconut Grove, FL [Member] Hotel [Member]		Dec. 31, 2013 Winter Haven, Miami Beach, FL [Member] Hotel [Member]		Dec. 31, 2013 Blue Moon, Miami Beach, FL [Member] Hotel [Member]		Dec. 31, 2013 Holiday Inn Exp, Langhorne, PA [Member] Assets Held-for-sale [Member]		Dec. 31, 2013 Holiday Inn Exp, King of Prussia, PA [Member] Assets Held-for-sale [Member]		Dec. 31, 2013 Courtyard, Langhorne, PA [Member] Assets Held-for-sale [Member]		Dec. 31, 2013 Hyatt House, Bridgewater, NJ [Member] Assets Held-for-sale [Member]
Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ (561,814)					$ (515,979)		$ (45,835)				$ (23,650)		$ (10,491)		$ (37,065)				$ (20,016)		$ (7,697)						$ (34,204)		$ (13,720)		$ (20,160)		$ (14,490)		$ (16,778)		$ (33,030)		$ (6,366)		$ (18,047)		$ (18,477)						$ (14,597)				$ (31,317)														$ (23,755)						$ (27,119)		$ (30,000)		$ (60,000)								$ (55,000)										$ (5,881)		$ (11,628)		$ (13,834)		$ (14,492)
Initial Costs [Abstract]
Land	349,108					339,026		10,082		1,325		5,472		2,615				4,283				1,872		1,956		1,970		8,905		2,912		6,216		3,941		3,060		8,823		1,500		7,816		14,239				3,490		8,213				21,077		10,691		11,075		10,281		1,133		12,152		9,335		6,376		1,765		7,341		8,095		13,489		35,699		7,108		1,456		30,329		32,940		15,656		4,146		5,400		4,874		1,088		2,557		3,064		3,373
Buildings & Improvements	1,211,398					1,155,733		55,665		12,737		23,280		14,815		47,414		14,475		25,018		8,968		9,793		11,761		33,500		16,001		17,229		12,560		19,968		30,273		6,671		19,040		16,778		27,315		24,382		12,869		22,042		42,955		41,637		43,113		36,687		7,267		21,100		58,048		26,089		16,929		28,591		35,141		27,025		55,805		29,556		14,954		57,016		79,300		51,674		17,456		18,147		20,354		6,573		13,339		16,068		19,685
Costs Capitalized Subsequent to Acquisition [Abstract]
Land	(564)					1		(565)																																																																						1																		(111)						(454)
Buildings & Improvements	69,365					66,902		2,463		1,924		1,440		2,233		1,435		1,860		2,466		364		2,338		1,470		1,856		3,372		2,953		3,441		3,350		2,537		219		692		129		969		5,901		1,238		638		278		275		46		41		3,908		186		1,102		2,465		1,068		217		2,801		1,795		51		7,486		1,419		713		177		40		9						(353)		1,738		986		92
Gross Amounts at which Carried at Close of Period [Abstract]
Land	348,544					339,027		9,517		1,325		5,472		2,615				4,283				1,872		1,956		1,970		8,905		2,912		6,216		3,941		3,060		8,823		1,500		7,816		14,239				3,490		8,213				21,077		10,691		11,075		10,281		1,133		12,152		9,335		6,376		1,765		7,341		8,095		13,489		35,700		7,108		1,456		30,329		32,940		15,656		4,146		5,400		4,874		977		2,557		3,064		2,919
Buildings & Improvements	1,280,768					1,222,639		58,129		14,661		24,720		17,048		48,849		16,335		27,484		9,332		12,131		13,231		35,356		19,373		20,182		16,001		23,318		32,810		6,890		19,732		16,907		28,284		30,283		14,107		22,680		43,233		41,912		43,159		36,728		11,175		21,286		59,150		28,554		17,997		28,808		37,942		28,820		55,856		37,042		16,373		57,729		79,477		51,715		17,466		18,148		20,355		6,220		15,077		17,054		19,778
Total Real Estate	1,629,312		1,520,151	1,481,433	1,291,213	1,561,666		67,646		15,986		30,192		19,663		48,849		20,618		27,484		11,204		14,087		15,201		44,261		22,285		26,398		19,942		26,378		41,633		8,390		27,548		31,146		28,284		33,773		22,320		22,680		64,310		52,603		54,234		47,009		12,308		33,438		68,485		34,930		19,762		36,149		46,037		42,309		91,556		44,150		17,829		88,058		112,417		67,371		21,612		23,548		25,229		7,197		17,634		20,118		22,697
Accumulated Depreciation Buildings & Improvements	(162,189)	[1]	(150,353)	(139,057)	(112,161)	(149,632)	[1]	(12,557)	[1]	(3,923)	[1]	(5,927)	[1]	(4,351)	[1]	(11,045)	[1]	(3,498)	[1]	(5,801)	[1]	(1,922)	[1]	(2,926)	[1]	(2,418)	[1]	(7,131)	[1]	(3,742)	[1]	(3,356)	[1]	(3,024)	[1]	(4,610)	[1]	(6,383)	[1]	(1,208)	[1]	(3,472)	[1]	(2,816)	[1]	(4,048)	[1]	(9,468)	[1]	(2,411)	[1]	(3,212)	[1]	(5,091)	[1]	(4,079)	[1]	(4,204)	[1]	(3,569)	[1]	(3,791)	[1]	(1,959)	[1]	(5,031)	[1]	(5,700)	[1]	(1,932)	[1]	(1,814)	[1]	(2,955)	[1]	(1,884)	[1]	(2,971)	[1]	(2,513)	[1]	(759)	[1]	(2,276)	[1]	(1,445)	[1]	(754)	[1]	(245)	[1]	15	[1]	17	[1]	(1,519)	[1]	(3,441)	[1]	(3,632)	[1]	(3,965)	[1]
Net Book Value Land, Buildings & Improvements	$ 1,467,123					$ 1,412,034		$ 55,089		$ 12,063		$ 24,265		$ 15,312		$ 37,804		$ 17,120		$ 21,683		$ 9,282		$ 11,161		$ 12,783		$ 37,130		$ 18,543		$ 23,042		$ 16,918		$ 21,768		$ 35,250		$ 7,182		$ 24,076		$ 28,330		$ 24,236		$ 24,305		$ 19,909		$ 19,468		$ 59,219		$ 48,524		$ 50,030		$ 43,440		$ 8,517		$ 31,479		$ 63,454		$ 29,230		$ 17,830		$ 34,335		$ 43,082		$ 40,425		$ 88,585		$ 41,637		$ 17,070		$ 85,782		$ 110,972		$ 66,617		$ 21,367		$ 23,563		$ 25,246		$ 5,678		$ 14,193		$ 16,486		$ 18,732
Date of Acquisition										Mar. 26, 2004		Apr. 01, 2005		Jul. 16, 2004		Jun. 16, 2005		Feb. 02, 2006		Feb. 16, 2006		Apr. 25, 2006		May 03, 2006		Jul. 27, 2006		Sep. 29, 2006		Dec. 28, 2006		Dec. 28, 2006		Dec. 28, 2006		Dec. 28, 2006		Dec. 28, 2006		Jan. 25, 2007		Feb. 01, 2007		Jun. 01, 2007		Jun. 13, 2008		Feb. 15, 2006		Jan. 04, 2008		Jan. 14, 2008		May 01, 2009		Feb. 09, 2010		Feb. 09, 2010		Feb. 09, 2010		Aug. 17, 2010		May 07, 2010		Sep. 01, 2010		Sep. 29, 2006		Dec. 21, 2010		Mar. 25, 2011		Apr. 15, 2011		May 19, 2011		Nov. 16, 2011		Mar. 01, 2012		May 07, 2012		Jun. 18, 2012		Apr. 09, 2013		May 30, 2013		Jun. 12, 2013		Dec. 20, 2013		Dec. 20, 2013		May 26, 2005		May 23, 2005		Jan. 03, 2006		Dec. 28, 2006

[1] Assets are depreciated over a 7 to 40 year life, upon which the latest income statement is computed

XML

Organization And Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hersha Hospitality Trust (“we” or the “Company”) was formed in May 1998 as a self-administered, Maryland real estate investment trust. We have elected to be taxed and expect to continue to elect to be taxed as a real estate investment trust, or REIT, for federal income tax purposes.

The Company owns a controlling general partnership interest in Hersha Hospitality Limited Partnership (“HHLP” or the “Partnership”), which owns a 99% limited partnership interest in various subsidiary partnerships. Hersha Hospitality, LLC (“HHLLC”), a Virginia limited liability company, owns a 1% general partnership interest in the subsidiary partnerships and the Partnership is the sole member of HHLLC.

The Partnership owns a taxable REIT subsidiary (“TRS”), 44 New England Management Company (“44 New England” or “TRS Lessee”), which leases certain of the Company’s hotels.

Hersha’s common shares of beneficial interest trade on the New York Stock Exchange (“the NYSE”) under the ticker symbol "HT", its 8.0% Series B preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR B” and its 6.875% Series C preferred shares of beneficial interest trade on the NYSE under the ticker symbol “HT PR C.”

As of December 31, 2013, the Company, through the Partnership and subsidiary partnerships, wholly owned 48 limited and full service hotels. All of the wholly owned hotel facilities are leased to the Company’s TRS, 44 New England.

In addition to the wholly owned hotel properties, as of December 31, 2013, the Company owned joint venture interests in another sixproperties. The properties owned by the joint ventures are leased to a TRS owned by the joint venture or to an entity owned by the joint venture partners and 44 New England. The following table lists the properties owned by these joint ventures:

Joint Venture	Ownership	Property	Location	Lessee/Sublessee
Unconsolidated Joint Ventures
Mystic Partners, LLC	66.7%	Marriott	Mystic, CT	Mystic Partners Leaseco, LLC
	8.8%	Hilton	Hartford, CT	Mystic Partners Leaseco, LLC
	66.7%	Courtyard	Norwich, CT	Mystic Partners Leaseco, LLC
	15.0%	Marriott	Hartford, CT	Mystic Partners Leaseco, LLC
SB Partners, LLC	50.0%	Holiday Inn Express	South Boston, MA	South Bay Sandeep, LLC
Hiren Boston, LLC	50.0%	Courtyard	South Boston, MA	South Bay Boston, LLC

Mystic Partners, LLC owns an interest in four hotel properties. Our interest in Mystic Partners, LLC is relative to our interest in each of the four properties owned by the joint venture as defined in the joint venture’s governing documents. Each of the four properties owned by Mystic Partners, LLC is leased to a separate entity that is consolidated in Mystic Partners Leaseco, LLC which is owned by 44 New England and our joint venture partner in Mystic Partners, LLC.

The properties are managed by eligible independent management companies, including Hersha Hospitality Management, LP (“HHMLP”). HHMLP is owned in part by certain of our trustees and executive officers and other unaffiliated third party investors.

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned TRS Lessee. All significant inter-company amounts have been eliminated.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Consolidated properties are either wholly owned or owned less than 100% by the Partnership and are controlled by the Company as general partner of the Partnership. Properties owned in joint ventures are also consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (VIE) or we maintain control of the asset through our voting interest in the entity. Control can be demonstrated when the general partner has the power to impact the economic performance of the partnership, which includes the ability of the general partner to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the limited partners and the inability of the limited partners to replace the general partner. Control can be demonstrated by the limited partners if the limited partners have the right to dissolve or liquidate the partnership or otherwise remove the general partner without cause or have rights to participate in the significant decisions made in the ordinary course of the partnership’s business.

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines of consolidation. Entities are consolidated if the determination is made that we are the primary beneficiary in a VIE or we maintain control of the asset through our voting interest or other rights in the operation of the entity. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have a controlling financial interest in that VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. Control can also be demonstrated by the ability of a member to manage day-to-day operations, refinance debt and sell the assets of the partnerships without the consent of the other member and the inability of the members to replace the managing member. Based on our examination, the following entities were determined to be VIE’s: Mystic Partners, LLC; Mystic Partners Leaseco, LLC; South Bay Boston, LLC; Brisam Management DE, LLC; Hersha Statutory Trust I; and Hersha Statutory Trust II. Mystic Partners, LLC is a VIE entity, however because we are not the primary beneficiary it is not consolidated by the Company. Our maximum exposure to losses due to our investment in Mystic Partners, LLC is limited to our investment in the joint venture which is $6,210 as of December 31, 2013. Also, Mystic Partners Leaseco, LLC; and South Bay Boston, LLC lease hotel properties from our joint venture interests and are VIEs. These entities are consolidated by the lessors, the primary beneficiaries of each entity. Brisam Management DE, LLC is consolidated in our financial statements, as we are considered to be the primary beneficiary. Hersha Statutory Trust I and Hersha Statutory Trust II are VIEs but HHLP is not the primary beneficiary in these entities. Accordingly, the accounts of Hersha Statutory Trust I and Hersha Statutory Trust II are not consolidated with and into HHLP.

We allocate resources and assess operating performance based on individual hotels and consider each one of our hotels to be an operating segment. All of our individual operating segments meet the aggregation criteria. All of our other real estate investment activities are immaterial and meet the aggregation criteria, and thus, we report one segment: investment in hotel properties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (US GAAP) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Although we believe the assumptions and estimates we made are reasonable and appropriate, as discussed in the applicable sections throughout these Consolidated Financial Statements, different assumptions and estimates could materially impact our reported results. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions and changes in market conditions could impact our future operating results.

Investment in Hotel Properties

The Company allocates the purchase price of hotel properties acquired based on the fair value of the acquired real estate, furniture, fixtures and equipment, and intangible assets and the fair value of liabilities assumed, including debt. The fair value allocations were determined using Level 3 inputs, which are typically unobservable and are based on our own assumptions, as there is little, if any, related market activity. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the following estimated useful lives:

Building and Improvements          7 to 40 Years

Furniture, Fixtures and Equipment2 to 7 Years

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

The Company periodically reviews the carrying value of each hotel to determine if circumstances indicate impairment to the carrying value of the investment in the hotel or that depreciation periods should be modified. If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel. Based on the properties undiscounted future cash flows, the Company will determine if the investment in such hotel is recoverable. If impairment is indicated, an adjustment will be made to reduce the carrying value of the hotel to reflect the hotel at fair value.

We consider a hotel to be held for sale when management and our independent trustees commit to a plan to sell the property, the property is available for sale, management engages in an active program to locate a buyer for the property and it is probable the sale will be completed within a year of the initiation of the plan to sell.

Acquisition-related cost, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the above acquired assets. 

Investment in Unconsolidated Joint Ventures

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a VIE or our voting interest in a voting interest entity, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliates as they occur rather than as dividends or other distributions are received, limited to the extent of our investment in, advances to and commitments for the investee. Pursuant to our joint venture agreements, allocations of profits and losses of some of our investments in unconsolidated joint ventures may be allocated disproportionately as compared to nominal ownership percentages due to specified preferred return rate thresholds.

The Company periodically reviews the carrying value of its investment in unconsolidated joint ventures to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. When an impairment indicator is present, we will estimate the fair value of the investment. Our estimate of fair value takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. This determination requires significant estimates by management, including the expected cash flows to be generated by the assets owned and operated by the joint venture. To the extent impairment has occurred and the impairment is considered other than temporary, the loss will be measured as the excess of the carrying amount over the fair value of our investment in the unconsolidated joint venture.

Development Loans Receivable

Historically, the Company provided secured first-mortgage and mezzanine financing to hotel developers. Development loans receivable have been recorded at cost and reviewed for potential impairment on an on-going basis. The Company’s development loans receivable were each secured by various hotel or hotel development properties or partnership interests in hotel or hotel development properties. Historically, we have determined that the borrowers generally were not VIEs, or in the limited instances where we had determine that the borrower was a VIE, our interest did not represent a controlling financial interest. Accordingly, we did not consolidate the operating results of the borrower in our consolidated financial statements. Our evaluation of this determination was made by reviewing the sufficiency of the borrower’s equity at risk, the rights of the borrower, and which party has i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. The analysis utilized by the Company in evaluating the development loans receivable involved considerable management judgment and assumptions.

A development loan receivable was considered impaired when it was probable, based on then current information, that the Company would be unable to collect all amounts due according to the loan’s contractual terms. The amount of impairment, if any, was measured by comparing the recorded amount of the loan to the present value of the expected cash flows or the fair value.

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand and in banks plus short-term investments with an initial maturity of three months or less when purchased.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Escrow Deposits

Escrow deposits include reserves for debt service, real estate taxes, and insurance and reserves for furniture, fixtures, and equipment replacements, as required by certain mortgage debt agreement restrictions and provisions.

Hotel Accounts Receivable

Hotel accounts receivable consists primarily of meeting and banquet room rental and hotel guest receivables. The Company generally does not require collateral. Ongoing credit evaluations are performed and an allowance for potential losses from uncollectible accounts is provided against the portion of accounts receivable that is estimated to be uncollectible.

Deferred Financing Costs

Deferred financing costs are recorded at cost and amortized over the terms of the related indebtedness using the effective interest method.

Due from/to Related Parties

Due from/to Related Parties represents current receivables and payables resulting from transactions related to hotel management and project management with affiliated entities. Due from related parties results primarily from advances of shared costs incurred and interest receivable on development loans made to related parties. Due to affiliates results primarily from hotel management and project management fees incurred. Both due to and due from related parties are generally settled within a period not to exceed one year.

Intangible Assets and Liabilities

Intangible assets consist of leasehold intangibles for above-market value of in-place leases and deferred franchise fees. The leasehold intangibles are amortized over the remaining lease term. Deferred franchise fees are amortized using the straight-line method over the life of the franchise agreement. 

Intangible liabilities consist of leasehold intangibles for below-market value of in-place leases. The leasehold intangibles are amortized over the remaining lease term. Intangible liabilities are included in the accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets.

Development Project Capitalization

We have opportunistically engaged in the development and re-development of hotel assets. We capitalize expenditures related to hotel development projects and renovations, including indirect costs such as interest expense, real estate taxes and utilities related to hotel development projects and renovations.

Noncontrolling Interest

Noncontrolling interest in the Partnership represents the limited partner’s proportionate share of the equity of the Partnership. Income (loss) is allocated to noncontrolling interest in accordance with the weighted average percentage ownership of the Partnership during the period. At the end of each reporting period the appropriate adjustments to the income (loss) are made based upon the weighted average percentage ownership of the Partnership during the period. Our ownership interest in the Partnership as of December 31, 2013, 2012 and 2011 was 96.7%,  96.5%, and 95.9%, respectively.

We define a noncontrolling interest as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interests are reported on the consolidated balance sheets within equity, but separately from the shareholders’ equity. Revenues, expenses and net income or loss attributable to both the Company and noncontrolling interests are reported on the consolidated statements of operations.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

In accordance with US GAAP, we classify securities that are redeemable for cash or other assets at the option of the holder, or not solely within the control of the issuer, outside of permanent equity in the consolidated balance sheet. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company considers the guidance in US GAAP to evaluate whether the Company controls the actions or events necessary to issue the maximum number of common shares that could be required to be delivered at the time of settlement of the contract.

We classify the noncontrolling interests of our consolidated joint ventures, consolidated variable interest entity, and certain Common Units (“Nonredeemable Common Units”) as equity. The noncontrolling interests of Nonredeemable Common Units totaled $29,523  as of December 31, 2013 and $15,484 as of December 31, 2012. As of December 31, 2013, there were 6,914,716 Nonredeemable Common Units outstanding with a fair market value of $38,515, based on the price per share of our common shares on the NYSE on such date.

In accordance with the partnership agreement of the Partnership, holders of these units may redeem them for cash unless we, in our sole and absolute discretion, elect to issue common shares on a one-for-one basis in lieu of paying cash.

Prior to February 1, 2013, certain Common Units (“Redeemable Common Units”) had been pledged as collateral in connection with a pledge and security agreement entered into by the Company and the holders of the Redeemable Common Units. The redemption feature contained in the pledge and security agreement where the Redeemable Common Units served as collateral contains a provision that could result in a net cash settlement outside of the control of the Company. As a result, prior to February 1, 2013, the Redeemable Common Units were classified in the mezzanine section of the consolidated balance sheets as they do not meet the requirements for equity classification under US GAAP. Effective February 1, 2013, the aforementioned pledge and security agreement is no longer in place and therefore these Common Units will be treated as Nonredeemable Common Units in future filings. The carrying value of the Redeemable Common Units equals the greater of carrying value based on the accumulation of historical cost or the redemption value.  As of December 31, 2013, there were no outstanding Common Units designated as Redeemable Common Units. As of December 31, 2012, the Redeemable Common Units were valued on the consolidated balance sheets at redemption value since the Redeemable Common Units redemption value was greater than historical cost of $11,753.  

Net income or loss attributed to Nonredeemable Common Units and Redeemable Common Units (collectively, “Common Units”), as well as the net income or loss related to the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity, is included in net income or loss in the consolidated statements of operations. Net income or loss attributed to the Common Units and the noncontrolling interests of our consolidated joint ventures and consolidated variable interest entity is excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

Shareholders’ Equity

On February 25, 2013, we completed a public offering of 3,000,0006.875% Series C Cumulative Redeemable Preferred Shares. These shares have a par value of $0.01 per share with a $25.00 liquidation preference per share. Net proceeds of the offering, after deducting the underwriting discount and the offering expenses payable by us, were approximately $72,370.  

We utilized the net proceeds of the offering to redeem all outstanding 8.00% Series A Cumulative Redeemable Preferred Shares on March 28, 2013, and for general corporate purposes.  The Series A Preferred Shares were redeemed at a per share redemption price of $25.00 together with accrued and unpaid dividends to the redemption date for an aggregate per share redemption price of $25.4056.  Dividends ceased accruing on the Series A Preferred Shares on March 28, 2013.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Terms of the Series B and Series C Preferred Shares outstanding at December 31, 2013 and the Series A and Series B Preferred Shares outstanding at December 31, 2012 are summarized as follows:

							Dividend Per Share
	Shares Outstanding						Year Ended December 31,
Series	December 31, 2013	December 31, 2012		Aggregate Liquidation Preference	Distribution Rate		2013		2012		2011
Series A	-	2,400,000	$	60,000	8.000%	$	0.5000	$	2.0000	$	2.0000
Series B	4,600,000	4,600,000	$	115,000	8.000%	$	2.0000	$	2.0000	$	1.2400
Series C	3,000,000	-	$	75,000	6.875%	$	1.4753	$	-	$	-
	7,600,000	7,000,000

On December 20, 2012, our Board of Trustees approved the repurchase of up to an aggregate of $75,000,000 of common stock. The program was extended through December 31, 2014. As of December 31, 2013, we did not repurchase any shares pursuant to the share repurchase program.

On May 8, 2012, we closed on a public offering in which we issued and sold 24,000,000 common shares through several underwriters for net proceeds to us of approximately $128,558. Immediately upon the closing the offering, we contributed all of the net proceeds of the offering to HHLP in exchange for additional Common Units. HHLP used the net proceeds of this offering to reduce some of the indebtedness outstanding under our revolving line of credit facility and for general corporate purposes, including the funding of future acquisitions.

On August 4, 2009, we entered into a purchase agreement with Real Estate Investment Group L.P. (“REIG”), pursuant to which we sold 5,700,000 common shares at a price of $2.50 per share to REIG for gross proceeds of $14,250.  We also granted REIG the option to buy up to an additional 5,700,000 common shares at a price of $3.00 per share, which was exercisable through August 4, 2014. On February 13, 2012, pursuant to the terms of the original option, we called in and canceled the option granted to REIG in exchange for the issuance of 2,521,561 common shares with an aggregate value equal to $13,566. This amount equals the volume weighted average price per common share for the 20 trading days prior to the exercise of the option, less the $3.00 option price, multiplied by the 5,700,000 common shares remaining under the option.

On May 18, 2011, we completed a public offering of 4,600,000 8.00% Series B Cumulative Redeemable Preferred Shares (“Series B Preferred Shares”), liquidation preference $25.00 per share, including 600,000 Series B Preferred Shares subject to an overallotment option exercised by the underwriters. Net proceeds of the offering, less expenses and underwriters commissions, were approximately $110,977. Net proceeds from the offering were used to reduce some of the indebtedness outstanding under our revolving line of credit facility and to fund a portion of the purchase price of Courtyard by Marriott, Westside, Los Angeles, CA, which was acquired on May 19, 2011.

Stock Based Compensation

We measure the cost of employee service received in exchange for an award of equity instruments based on the grant-date fair value of the award. The compensation cost is amortized on a straight line basis over the period during which an employee is required to provide service in exchange for the award. The compensation cost related to performance awards that are contingent upon market based criteria being met is recorded at the fair value of the award on the date of the grant and amortized over the performance period.

Derivatives and Hedging

The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. Interest rate caps designated as cash flow hedges limit the Company’s exposure to increased cash payments due to increases in variable interest rates.

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

Revenue Recognition

We recognize revenue and expense for all consolidated hotels as hotel operating revenue and hotel operating expense when earned and incurred. These revenues are recorded net of any sales or occupancy taxes collected from our guests. We participate in frequent guest programs sponsored by the brand owners of our hotels and we expense the charges associated with those programs, as incurred.

Interest income on development loan financing is recorded in the period earned based on the interest rate of the loan and outstanding balance during the period. Development loans receivable and accrued interest on the development loans receivable are evaluated to determine if outstanding balances are collectible. Interest is recorded only if it is determined the outstanding loan balance and accrued interest balance are collectible.

Other revenues consist primarily of fees earned for asset management services provided to hotels we own through unconsolidated joint ventures. Fees are earned as a percentage of hotel revenue and are recorded in the period earned to the extent of the noncontrolling interest ownership.

Income Taxes

The Company qualifies as a REIT under applicable provisions of the Internal Revenue Code, as amended, and intends to continue to qualify as a REIT. In general, under such provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income will not be subject to Federal income tax to the extent of the income which it distributes. Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes due primarily to differences in depreciation of hotel properties for Federal income tax purposes.

Deferred income taxes relate primarily to the TRS Lessee and are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS Lessee and their respective tax bases and for their operating loss and tax credit carry forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation. For the years ended December 31, 2012, 2011 and 2010, the Company did not record any uncertain tax positions. As of December 31, 2013, with few exceptions, the Company is subject to tax examinations by U.S. federal, state, and local income tax authorities for years 2003 through 2013.

Reclassification

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

XML

Development Loans Receivable (Advances And Repayments On Development Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Development Loans Receivable [Abstract]
Balance at beginning of year	$ 28,425	$ 35,747	$ 41,653
Interest added to principal		678	2,094
Repayments	(15,122)	(8,000)
Principal exchanged for interest in hotel properties	(13,303)		(8,000)
Balance at end of year		$ 28,425	$ 35,747

XML

Income Taxes (Components Of The Company's Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended					12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income tax expense (benefit): State: Current							$ 229
Income tax expense (benefit): Federal: Deferred						(3,604)	(3,584)
Income tax expense (benefit): State: Deferred						(1,996)
Total income tax benefit	(3,318)	(2,375)	1,222	(1,129)	(3,355)	(5,600)	(3,355)
Income tax expense (benefit): From discontinued operations						190
Income tax expense (benefit): Total						$ (5,410)	$ (3,355)

XML

Share Based Payments (Summary Of Unvested Share Awards Issued To Executives) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
Unvested Share Awards [Abstract]
Shares Vested (in shares)	1,391,883		704,962
Unearned Compensation	$ 1,305,000		$ 1,072,000
2012 Annual LTIP [Member] | Issued 03-20-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	779,045
Share Price on date of grant (in dollars per share)	$ 5.95
Vesting Period	3 years
Vesting Schedule (in hundredths)	25.00%	[1]
Shares Vested (in shares)	389,520
Unearned Compensation	1,039,000
2011 Annual LTIP [Member] | Issued 03-26-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	748,927
Share Price on date of grant (in dollars per share)	$ 5.45
Vesting Period	3 years
Vesting Schedule (in hundredths)	25.00%	[1]
Shares Vested (in shares)	561,694		374,462
Unearned Compensation	266,000		892,000
2010 Annual LTIP [Member] | Issued 03-30-2011 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	440,669
Share Price on date of grant (in dollars per share)	$ 5.98
Vesting Period	3 years
Vesting Schedule (in hundredths)	25.00%	[1]
Shares Vested (in shares)	440,669		330,500
Unearned Compensation			180,000
Restricted Share Awards [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	2,085,631
Shares Vested (in shares)	958,835		702,785
Unearned Compensation	4,102,000		5,420,000
Restricted Share Awards [Member] | Issued 06-01-2009 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	744,128
Share Price on date of grant (in dollars per share)	$ 2.800
Vesting Period	4 years
Vesting Schedule (in hundredths)	25.00%
Shares Vested (in shares)	744,128		558,305
Unearned Compensation			217,000
Restricted Share Awards [Member] | Issued 06-01-2010 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	182,308
Share Price on date of grant (in dollars per share)	$ 4.630
Shares Vested (in shares)	182,308		139,522
Unearned Compensation			82,000
Restricted Share Awards [Member] | Issued 06-30-2011 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	17,692
Share Price on date of grant (in dollars per share)	$ 5.570
Shares Vested (in shares)	9,919		4,958
Unearned Compensation	28,000		51,000
Restricted Share Awards [Member] | Issued 04-18-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	1,035,595
Share Price on date of grant (in dollars per share)	$ 5.470
Vesting Period	5 years
Vesting Schedule (in hundredths)	33.30%	[2]
Unearned Compensation	3,746,000		4,842,000
Restricted Share Awards [Member] | Issued 06-29-2012 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	52,703
Share Price on date of grant (in dollars per share)	$ 5.280
Shares Vested (in shares)	22,480
Unearned Compensation	110,000		228,000
Restricted Share Awards [Member] | Issued 06-28-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	48,600
Share Price on date of grant (in dollars per share)	$ 5.640
Unearned Compensation	199,000
Restricted Share Awards [Member] | Issued 09-20-2013 [Member]
Unvested Share Awards [Abstract]
Shares Issued (in shares)	4,605
Share Price on date of grant (in dollars per share)	$ 5.520
Unearned Compensation	$ 19,000
Minimum [Member] | Restricted Share Awards [Member] | Issued 06-01-2010 [Member]
Unvested Share Awards [Abstract]
Vesting Period	2 years
Vesting Schedule (in hundredths)	25.00%
Minimum [Member] | Restricted Share Awards [Member] | Issued 06-30-2011 [Member]
Unvested Share Awards [Abstract]
Vesting Period	2 years
Vesting Schedule (in hundredths)	25.00%
Minimum [Member] | Restricted Share Awards [Member] | Issued 06-29-2012 [Member]
Unvested Share Awards [Abstract]
Vesting Period	2 years
Vesting Schedule (in hundredths)	25.00%
Minimum [Member] | Restricted Share Awards [Member] | Issued 06-28-2013 [Member]
Unvested Share Awards [Abstract]
Vesting Period	2 years
Vesting Schedule (in hundredths)	25.00%
Minimum [Member] | Restricted Share Awards [Member] | Issued 09-20-2013 [Member]
Unvested Share Awards [Abstract]
Vesting Period	2 years
Vesting Schedule (in hundredths)	25.00%
Maximum [Member] | Restricted Share Awards [Member] | Issued 06-01-2010 [Member]
Unvested Share Awards [Abstract]
Vesting Period	3 years
Vesting Schedule (in hundredths)	50.00%
Maximum [Member] | Restricted Share Awards [Member] | Issued 06-30-2011 [Member]
Unvested Share Awards [Abstract]
Vesting Period	4 years
Vesting Schedule (in hundredths)	50.00%
Maximum [Member] | Restricted Share Awards [Member] | Issued 06-29-2012 [Member]
Unvested Share Awards [Abstract]
Vesting Period	4 years
Vesting Schedule (in hundredths)	50.00%
Maximum [Member] | Restricted Share Awards [Member] | Issued 06-28-2013 [Member]
Unvested Share Awards [Abstract]
Vesting Period	4 years
Vesting Schedule (in hundredths)	50.00%
Maximum [Member] | Restricted Share Awards [Member] | Issued 09-20-2013 [Member]
Unvested Share Awards [Abstract]
Vesting Period	4 years
Vesting Schedule (in hundredths)	50.00%

[1] 25% of the issued shares vested immediately upon issuance.  In general, the remaining shares vest 25% on the first through third anniversaries of the date of issuance (subject to continuous employment through the applicable vesting date).

[2] On April 18, 2012, the Company entered into amended and restated employment agreements with the Company’s executive officers.  To induce the executives to agree to the substantial reduction in benefits upon certain terminations following a change of control as described in the agreements, the Company awarded an aggregate of 1,035,595 restricted common shares to the executives pursuant to the 2012 Plan.  None of these restricted common shares will vest prior to the third anniversary of the date of issuance.  Thereafter, 33.3% of each award of restricted common shares will vest on each of the third, fourth and fifth anniversaries of the date of issuance.  Vesting will accelerate upon a change of control or if the relevant executive’s employment with the Company were to terminate for any reason other than for cause (as defined in the agreements).

XML

Organization And Summary Of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Organization And Summary Of Significant Accounting Policies [Abstract]

Joint Venture Properties

Joint Venture	Ownership	Property	Location	Lessee/Sublessee
Unconsolidated Joint Ventures
Mystic Partners, LLC	66.7%	Marriott	Mystic, CT	Mystic Partners Leaseco, LLC
	8.8%	Hilton	Hartford, CT	Mystic Partners Leaseco, LLC
	66.7%	Courtyard	Norwich, CT	Mystic Partners Leaseco, LLC
	15.0%	Marriott	Hartford, CT	Mystic Partners Leaseco, LLC
SB Partners, LLC	50.0%	Holiday Inn Express	South Boston, MA	South Bay Sandeep, LLC
Hiren Boston, LLC	50.0%	Courtyard	South Boston, MA	South Bay Boston, LLC

Schedule Of Major Asset Depreciation

Building and Improvements          7 to 40 Years

Furniture, Fixtures and Equipment2 to 7 Years

Schedule Of Preferred Stock

							Dividend Per Share
	Shares Outstanding						Year Ended December 31,
Series	December 31, 2013	December 31, 2012		Aggregate Liquidation Preference	Distribution Rate		2013		2012		2011
Series A	-	2,400,000	$	60,000	8.000%	$	0.5000	$	2.0000	$	2.0000
Series B	4,600,000	4,600,000	$	115,000	8.000%	$	2.0000	$	2.0000	$	1.2400
Series C	3,000,000	-	$	75,000	6.875%	$	1.4753	$	-	$	-
	7,600,000	7,000,000

XML

Cash Flow Disclosures And Non Cash Investing And Financing Activities (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash Flow Disclosures And Non Cash Investing And Financing Activities [Abstract]
Interest paid	$ 42,984,000	$ 41,744,000	$ 42,726,000

XML

Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2013

Discontinued Operations [Abstract]

Assets Held For Sale

	December 31, 2013
Land	$	9,517
Buildings and Improvements		58,129
Furniture, Fixtures and Equipment		9,198
		76,844
Less Accumulated Depreciation & Amortization		(20,261)
Assets Held for Sale	$	56,583
Liabilities Related to Assets Held for Sale	$	45,835

Components Of Discontinued Operations

	Year Ended December 31,
		2013		2012		2011
Revenue:
Hotel Operating Revenues	$	58,045	$	63,465	$	96,901
Other Revenue		-		11		55
Total Revenues		58,045		63,476		96,956
Expenses:
Hotel Operating Expenses		35,158		39,046		60,288
Hotel Ground Rent		-		72		433
Real Estate and Personal Property Taxes and Property Insurance		3,316		3,636		5,460
General and Administrative		36		27		597
Acquisition and Termination Transaction Costs		-		8		(17)
Depreciation and Amortization		7,050		9,148		15,142
Interest Expense		4,863		7,872		12,817
Other Expense		44		10		4
Loss on Debt Extinguishment		-		168		43
Income Tax Expense		190		-		-
Total Expenses		50,657		59,987		94,767
Income from Discontinued Operations	$	7,388	$	3,489	$	2,189

Real Estate Assets Sold

Disposed Assets

Hotel	Acquisition Date	Disposition Date		Consideration		Gain on Disposition
Non-Core Portfolio II (12)	January 1999 - July 2010	December 2013	$	158,600	$	31,559	(1)
Holiday Inn Express, Camp Springs, MD	June 2008	September 2013		8,500		120
Comfort Inn, Harrisburg, PA	January 1999	June 2013		3,700		442
2013 Total						32,121
Non-Core Hotel Portfolio (18)	January 1999 - July 2007	February 2012 & May 2012	$	155,000	$	4,978	(2)
Land Parcel, Eighth Ave, Manhattan, NY	June 2006	April 2012		19,250		5,037
Comfort Inn, North Dartmouth, MA	May 2006	March 2012		-		1,216	(3)
2012 Total					$	11,231
Comfort Inn, West Hanover, PA	May 1998	July 2011	$	5,250	$	949
Land Parcel,  Nevins Street, Brooklyn, NY	June 2007	December 2011		4,500		42
2011 Total					$	991

(1) In September 2013, our Board of Trustees authorized management of the Company to sell this portfolio. On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties, for an aggregate purchase price of approximately $217,000.  The 16 non-core hotel properties in the portfolio were acquired by the Company between 1999 and 2010. We recorded an impairment loss of approximately $6,591 for those assets for which the anticipated net proceeds do not exceed the carrying value.

On December 20, 2013, the Company closed on the sale of 12 of these non-core hotel properties.  As a result of entering into these purchase and sale agreements for the 16 non-core assets mentioned above, the operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2013, 2012, and 2011.  The 12 assets were sold for a total sales price of $158,600, reduced the Company’s consolidated mortgage debt by $33,044 and generated a gain on sale of approximately $31,559.   In February 2014, the remaining 4 assets were sold for a total sales price of $58,400 and reduced the Company’s consolidated mortgage debt by $45,710.

(2) In May 2011, our Board of Trustees authorized management of the Company to sell this portfolio.  On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture, for an aggregate purchase price of approximately $155,000.  The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006.  As a result of entering into these purchase and sale agreements for the 18 non-core assets mentioned above, we recorded an impairment loss in 2011 of approximately $30,248 for those consolidated assets for which the anticipated net proceeds did not exceed the carrying value.

On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three hotel properties owned in part by the Company through an unconsolidated joint venture, and closed on the remaining 4 properties, on May 8, 2012, including one hotel property owned in part by the Company through an unconsolidated joint venture.  The operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the years ended December 31, 2012 and 2011.  The 18 assets were sold for a total sales price of $155,000, reduced the Company’s consolidated mortgage debt by $61,298 and generated a gain on sale of approximately $4,910.   

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

On March 30, 2012, we transferred the title to the Comfort Inn, located in North Dartmouth, to the lender.  Previously, we had ceased operations at this property on March 31, 2011.  The operating results were reclassified to discontinued operations in the statements of operations for the years ended December 31, 2012 and 2011.  The transfer of the title resulted in a gain of approximately $1,216, since the outstanding mortgage loan payable exceeded the net book value of the property.

XML

Cash Flow Disclosures And Non Cash Investing And Financing Activities

12 Months Ended

Dec. 31, 2013

Cash Flow Disclosures And Non Cash Investing And Financing Activities [Abstract]

Cash Flow Disclosures And Non Cash Investing And Financing Activities

NOTE 11 – CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES

Interest paid during 2013, 2012, and 2011 totaled $42,984,  $41,744, and $42,726 respectively. The following non-cash investing and financing activities occurred during 2013, 2012 and 2011:

	2013		2012		2011
Common Shares issued as part of the Dividend Reinvestment Plan	$	38	$	24	$	14
Acquisition of hotel properties and consolidation of variable interest entities:
Issuance of Common Units		-		-		204
Debt assumed, net of discount		-		85,913		62,552
Development loan accrued interest revenue receivable paid in-kind by adding balance to development loan principal		-		678		2,094
Settlement of development loan receivable principal and accrued interest revenue receivable		13,303		-		8,300
Disposition of hotel properties
Investment in hotel properties, net, conveyed to mortgage lender		-		1,938		-
Debt conveyed to mortgage lender		-		2,940		-
Debt assumed by purchaser		-		54,217		-
Conversion of Common Units to Common Shares		106		572		639
Reallocation of noncontrolling interest		-		(966)		3,835