10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒

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

For the quarterly period ended June 30, 2020

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	25-1811499
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

44 Hersha Drive	Harrisburg	PA	17102
(Address of Principal Executive Offices)			(Zip Code)

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

Former name, former address and former fiscal year, if changed since last report: Not applicable

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Shares of Beneficial Interest, par value $.01 per share	HT	New York Stock Exchange
6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PC	New York Stock Exchange
6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PD	New York Stock Exchange
6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PE	New York Stock Exchange

Indicate by check mark whether the registrant (1) 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 (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒Yes ☐No

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Yes ☐No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐

Yes ☒No 

As of August 6, 2020, the number of Class A common shares of beneficial interest outstanding was 38,789,371 and there were no Class B common shares of beneficial interest outstanding.

 Hersha Hospitality Trust

Table of Contents

PART I.  FINANCIAL INFORMATION		Page
Item 1.	Financial Statements.
	Consolidated Balance Sheets as of June 30, 2020 [Unaudited] and December 31, 2019.	4
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019 [Unaudited].	5
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2020 and 2019 [Unaudited].	7
	Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2020 and 2019 [Unaudited].	8
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 [Unaudited].	12
	Notes to the Consolidated Financial Statements [Unaudited].	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	54
Item 4.	Controls and Procedures.	55
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings.	56
Item 1A.	Risk Factors.	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	57
Item 3.	Defaults Upon Senior Securities.	57
Item 4.	Mine Safety Disclosures.	57
Item 5.	Other Information.	57
Item 6.	Exhibits.	60
	Signatures.	61

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

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

	June 30, 2020		December 31, 2019
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation	$	1,902,464	$	1,975,973
Investment in Unconsolidated Joint Ventures	7,527		8,446
Cash and Cash Equivalents	23,228		27,012
Escrow Deposits	7,374		9,973
Hotel Accounts Receivable	3,801		9,213
Due from Related Parties	2,363		6,113
Intangible Assets, Net of Accumulated Amortization of $6,705 and $6,545	1,876		2,137
Right of Use Assets	44,761		45,384
Other Assets	20,996		38,177
Hotel Assets Held for Sale	40,170		—
Total Assets	$	2,054,560	$	2,122,428
Liabilities and Equity:
Line of Credit	$	95,000	$	48,000
Term Loans, Net of Unamortized Deferred Financing Costs (Note 5)	697,597		697,183
Unsecured Notes Payable, Net of Unamortized Deferred Financing Costs (Note 5)	50,763		50,736
Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs	331,771		332,280
Lease Liabilities	54,217		54,548
Accounts Payable, Accrued Expenses and Other Liabilities	74,161		47,626
Dividends and Distributions Payable	—		17,058
Total Liabilities	$	1,303,509	$	1,247,431
Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 1)	$	—	$	3,196
Equity:
Shareholders' Equity:
Preferred Shares:  $.01 Par Value, 29,000,000 Shares Authorized, 3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, with Liquidation Preferences of $25.00 Per Share (Note 1)	$	147	$	147
Common Shares:  Class A, $.01 Par Value, 104,000,000 Shares Authorized at June 30, 2020 and December 31, 2019; 38,789,371 and 38,652,650 Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, respectively	388		387
Common Shares:  Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2020 and December 31, 2019	—		—
Accumulated Other Comprehensive (Loss) Income	(27,097)		1,010
Additional Paid-in Capital	1,149,291		1,144,808
Distributions in Excess of Net Income	(427,393)		(338,695)
Total Shareholders' Equity	695,336		807,657
Noncontrolling Interests (Note 1)	55,715		64,144
Total Equity	751,051		871,801
Total Liabilities and Equity	$	2,054,560	$	2,122,428

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

4

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenue:
Hotel Operating Revenues:
Room	$	15,139	$	118,980	$	86,222	$	210,465
Food & Beverage	136		18,253		10,211		32,481
Other Operating Revenues	2,137		10,280		10,917		19,210
Other Revenues	29		(12)		228		138
Total Revenues	17,441		147,501		107,578		262,294
Operating Expenses:
Hotel Operating Expenses:
Room	3,622		24,013		22,714		46,103
Food & Beverage	721		13,990		11,342		26,822
Other Operating Expenses	14,035		44,607		49,841		84,796
Hotel Ground Rent	1,058		1,114		2,121		2,224
Real Estate and Personal Property Taxes and Property Insurance	9,969		8,997		19,911		18,394
General and Administrative (including Share Based Payments of $1,799 and $3,474, and $4,255 and $5,432 for the three and six months ended June 30, 2020 and 2019, respectively)	4,187		8,100		10,021		13,700
Loss on Impairment of Assets	1,069		—		1,069		—
Depreciation and Amortization	24,322		23,964		48,510		48,092
Total Operating Expenses	58,983		124,785		165,529		240,131
Operating (Loss) Income	(41,542)		22,716		(57,951)		22,163
Interest Income	2		58		38		141
Interest Expense	(13,481)		(13,325)		(26,488)		(26,223)
Other Expense	(385)		(124)		(457)		(83)
Loss on Debt Extinguishment	—		(34)		—		(34)
(Loss) Income Before Results from Unconsolidated Joint Venture Investments and Income Taxes	(55,406)		9,291		(84,858)		(4,036)
(Loss) Income from Unconsolidated Joint Ventures	(502)		299		(1,520)		480
(Loss) Income Before Income Taxes	(55,908)		9,590		(86,378)		(3,556)
Income Tax (Expense) Benefit	(15,872)		(4,031)		(11,374)		1,233
Net (Loss) Income	(71,780)		5,559		(97,752)		(2,323)
Loss Allocated to Noncontrolling Interests - Common Units	7,164		49		10,061		1,112
Loss (Income) Allocated to Noncontrolling Interests - Consolidated Joint Venture	3,196		(8)		3,196		152
Preferred Distributions	(6,044)		(6,043)		(12,088)		(12,087)
Net Loss Applicable to Common Shareholders	$	(67,464)	$	(443)	$	(96,583)	$	(13,146)

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Earnings Per Share:
BASIC
Loss from Continuing Operations Applicable to Common Shareholders	$	(1.75)	$	(0.02)	$	(2.50)	$	(0.35)
DILUTED
Loss from Continuing Operations Applicable to Common Shareholders	$	(1.75)	$	(0.02)	$	(2.50)	$	(0.35)
Weighted Average Common Shares Outstanding:
Basic	38,609,922		39,127,385		38,587,011		39,121,421
Diluted*	38,609,922		39,127,385		38,587,011		39,121,421

*Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because 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) 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:

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Common Units and Vested LTIP Units	3,943,319	3,379,354	3,891,032	3,344,178
Unvested Stock Awards and LTIP Units Outstanding	547,315	616,937	267,443	423,399
Contingently Issuable Share Awards	185,754	320,240	680,979	507,006
Total Potentially Dilutive Securities Excluded from the Denominator	4,676,388	4,316,531	4,839,454	4,274,583

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS]

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net (Loss) Income	$	(71,780)	$	5,559	$	(97,752)	$	(2,323)
Other Comprehensive Loss
Change in Fair Value of Derivative Instruments	(2,020)		(4,122)		(33,146)		(5,902)
Less:  Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income	1,228		(1,112)		2,205		(2,253)
Total Other Comprehensive Loss	$	(792)	$	(5,234)	$	(30,941)	$	(8,155)
Comprehensive (Loss) Income	(72,572)		325		(128,693)		(10,478)
Less:  Comprehensive Loss Attributable to Noncontrolling Interests - Common Units	7,270		465		12,895		1,755
Less:  Comprehensive Loss (Income) Attributable to Noncontrolling Interests - Consolidated Joint Venture	3,196		(8)		3,196		152
Less:  Preferred Distributions	(6,044)		(6,043)		(12,088)		(12,087)
Comprehensive Loss Attributable to Common Shareholders	$	(68,150)	$	(5,261)	$	(124,690)	$	(20,658)

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

	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 Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at March 31, 2020	38,673,242	387	—	14,703,214	147	1,145,450	(26,411)	(362,777)	756,796	4,279,946	59,162	815,958	3,196
Issuance Costs	—	—	—	—	—	(10)	—	—	(10)	—	—	(10)	—
Share Based Compensation:
Grants	116,129	1	—	—	—	—	—	—	1	1,101,924	—	1	—
Amortization	—	—	—	—	—	655	—	—	655		3,823	4,478	—
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	(686)	—	(686)	—	(106)	(792)	—
Adjustment to Record Noncontrolling Interest at Redemption Value	—	—	—	—	—	3,196	—	—	3,196	—	—	3,196	(3,196)
Net Loss	—	—	—	—	—	—	—	(64,616)	(64,616)	—	(7,164)	(71,780)	—
Balance at June 30, 2020	38,789,371	388	—	14,703,214	147	1,149,291	(27,097)	(427,393)	695,336	5,381,870	55,715	751,051	—

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

8

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

	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 Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at March 31, 2019	39,213,269	392	—	14,703,214	147	1,151,654	1,534	(291,282)	862,445	4,279,946	64,808	927,253	2,848
Issuance Costs	—	—	—	—	—	(21)	—	—	(21)	—	—	(21)	—
Dividends and Distributions declared:
Common Shares ($0.28 per share)	—	—	—	—	—	—	—	(10,987)	(10,987)	—	—	(10,987)	—
Preferred Shares	—	—	—	—	—	—	—	(6,044)	(6,044)	—	—	(6,044)	—
Common Units ($0.28 per share)	—	—	—	—	—	—	—	—	—	—	(580)	(580)	—
LTIP Units ($0.28 per share)	—	—	—	—	—	—	—	—	—	—	(620)	(620)	—
Dividend Reinvestment Plan	1,231	—	—	—	—	21	—	—	21	—	—	21	—
Share Based Compensation:
Grants	26,424	1	—	—	—	400	—	—	401	—	—	401	—
Amortization	—	—	—	—	—	893	—	—	893	—	1,430	2,323	—
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	(4,819)	—	(4,819)	—	(415)	(5,234)	—
Adjustment to Record Noncontrolling Interest at Redemption Value	—	—	—	—	—	(8)	—	—	(8)	—	—	(8)	8
Net Income	—	—	—	—	—	—	—	5,608	5,608		(49)	5,559	—
Balance at June 30, 2019	39,240,924	393	—	14,703,214	147	1,152,939	(3,285)	(302,705)	847,489	4,279,946	64,574	912,063	2,856

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

9

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

	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 Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at December 31, 2019	38,652,650	387	—	14,703,214	147	1,144,808	1,010	(338,695)	807,657	4,279,946	64,144	871,801	3,196
Issuance Costs	—	—	—	—	—	(30)	—	—	(30)	—	—	(30)	—
Dividends and Distributions declared:
Preferred Shares	—	—	—	—	—	—	—	(1,007)	(1,007)	—	—	(1,007)	—
Dividend Reinvestment Plan	1,094	—	—	—	—	14	—	—	14	—	—	14	—
Share Based Compensation:
Grants	135,627	1	—	—	—	—	—	—	1	1,101,924	—	1	—
Amortization	—	—	—	—	—	1,303	—	—	1,303		4,466	5,769	—
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	(28,107)	—	(28,107)	—	(2,834)	(30,941)	—
Adjustment to Record Noncontrolling Interest at Redemption Value	—	—	—	—	—	3,196	—	—	3,196	—	—	3,196	(3,196)
Net Loss	—	—	—	—	—	—	—	(87,691)	(87,691)	—	(10,061)	(97,752)	—
Balance at June 30, 2020	38,789,371	388	—	14,703,214	147	1,149,291	(27,097)	(427,393)	695,336	5,381,870	55,715	751,051	—

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

	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 Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at December 31, 2018	39,458,626	395	—	14,703,214	147	1,155,776	4,227	(267,740)	892,805	3,749,665	62,010	954,815	2,708
Repurchase of Common Shares	(273,538)	(3)	—	—	—	(4,693)	—	—	(4,696)	—	—	(4,696)	—
Issuance Costs	—	—	—	—	—	(21)	—	—	(21)	—	—	(21)	—
Dividends and Distributions declared:
Common Shares ($0.56 per share)	—	—	—	—	—	—	—	(21,967)	(21,967)	—	—	(21,967)	—
Preferred Shares	—	—	—	—	—	—	—	(12,087)	(12,087)	—	—	(12,087)	—
Common Units ($0.56 per share)	—	—	—	—	—	—	—	—	—	—	(1,158)	(1,158)	—
LTIP Units ($0.56 per share)	—	—	—	—	—	—	—	—	—	—	(1,362)	(1,362)	—
Dividend Reinvestment Plan	2,496	—	—	—	—	42	—	—	42	—	—	42	—
Share Based Compensation:
Grants	53,340	1	—	—	—	400	—	—	401	530,281	—	401	—
Amortization	—	—	—	—	—	1,583	—	—	1,583	—	6,839	8,422	—
Equity Contribution to Consolidated Joint Venture	—	—	—	—	—	—	—	—	—	—	—	—	300
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	(7,512)	—	(7,512)	—	(643)	(8,155)	—
Adjustment to Record Noncontrolling Interest at Redemption Value	—	—	—	—	—	(148)	—	—	(148)	—	—	(148)	148
Net Loss	—	—	—	—	—	—	—	(911)	(911)		(1,112)	(2,023)	(300)
Balance at June 30, 2019	39,240,924	393	—	14,703,214	147	1,152,939	(3,285)	(302,705)	847,489	4,279,946	64,574	912,063	2,856

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS]

	Six Months Ended June 30,
	2020		2019
Operating Activities:
Net Loss	$	(97,752)	$	(2,323)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Loss from Impairment of Assets	1,069		—
Deferred Taxes	11,390		(1,348)
Depreciation	48,273		47,791
Amortization	1,116		1,107
Loss on Debt Extinguishment	—		17
Equity in Loss (Income) of Unconsolidated Joint Ventures	1,520		(480)
Distributions from Unconsolidated Joint Ventures	—		478
Loss Recognized on Change in Fair Value of Derivative Instrument	2,205		163
Share Based Compensation Expense	4,255		5,432
Change in Assets and Liabilities:
(Increase) Decrease in:
Hotel Accounts Receivable	5,412		(325)
Other Assets	4,884		(1,317)
Due from Related Parties	3,750		(2,453)
(Decrease) Increase in:
Accounts Payable, Accrued Expenses and Other Liabilities	(2,479)		129
Net Cash Provided by (Used in) Operating Activities	$	(16,357)	$	46,871
Investing Activities:
Capital Expenditures	(15,612)		(21,230)
Cash Paid for Hotel Development Projects	21		(467)
Contributions to Unconsolidated Joint Ventures	(600)		(4,000)
Distributions from Unconsolidated Joint Ventures	—		1,022
Net Cash Used in Investing Activities	$	(16,191)	$	(24,675)

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

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HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS]

	Six Months Ended June 30,
	2020		2019
Financing Activities:
Borrowings Under Line of Credit, Net	$	47,000	$	27,000
Principal Repayment of Mortgages and Notes Payable	(650)		(56,636)
Proceeds of Paycheck Protection Program ("PPP") Loans	18,936		—
Repayment of PPP Loans	(18,936)		—
Cash Paid for Deferred Financing Costs	(2,104)		(643)
Repurchase of Common Shares	—		(4,624)
Dividends Paid on Common Shares	(10,809)		(21,980)
Dividends Paid on Preferred Shares	(6,044)		(12,087)
Distributions Paid on Common Units and LTIP Units	(1,198)		(2,371)
Other Financing Activities	(30)		(91)
Net Cash Provided by (Used in) Financing Activities	$	26,165	$	(15,432)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	$	(6,383)	$	6,764
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period	36,985		40,783
Cash, Cash Equivalents, and Restricted Cash - End of Period	$	30,602	$	47,547

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

13

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Hersha Hospitality Trust (“we,” “us,” “our” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and with the general instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future period. Accordingly, readers of these consolidated interim financial statements should refer to the Company’s audited financial statements prepared in accordance with US GAAP, and the related notes thereto, for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as certain footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from this report pursuant to the rules of the Securities and Exchange Commission.

We are a self-administered Maryland real estate investment trust that was organized in May 1998 and completed our initial public offering in January 1999. Our common shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “HT.” We own our hotels and our investments in joint ventures through our operating partnership, Hersha Hospitality Limited Partnership (“HHLP” or “the Partnership”), for which we serve as the sole general partner. As of June 30, 2020, we owned an approximate 87.8% partnership interest in HHLP, including a 1.0% general partnership interest.

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with US GAAP and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned Taxable REIT Subsidiary Lessee (“TRS Lessee”), 44 New England Management Company. All significant inter-company amounts have been eliminated.

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.

Variable Interest Entities

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. 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, there have been no changes to the operating structure of our legal entities during the six months ended June 30, 2020 and, therefore, there are no changes to our evaluation of VIE's as presented within our annual report presented on Form 10-K for the year ended December 31, 2019.

14

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

Noncontrolling Interest

We classify the noncontrolling interests of our common units of limited partnership interest in HHLP (“Common Units”), and Long Term Incentive Plan Units (“LTIP Units”) as equity. LTIP Units are a separate class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances. The noncontrolling interest of Common Units and LTIP Units totaled $55,715 as of June 30, 2020 and $64,144 as of December 31, 2019. As of June 30, 2020, there were 5,381,870 Common Units and LTIP Units outstanding with a fair market value of $31,000, based on the price per share of our common shares on the NYSE on such date. In accordance with the partnership agreement of HHLP, holders of these Common 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.

Net income or loss attributed to Common Units and LTIP Units is included in net income or loss but excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

We entered into a joint venture that owns the Ritz-Carlton Coconut Grove, FL, in which our joint venture partner has a noncontrolling equity interest of 15% in the property. Hersha Holding RC Owner, LLC, the owner entity of the Ritz-Carlton Coconut Grove joint venture ("Ritz Coconut Grove"), will distribute income based on cash available for distribution which will be distributed as follows: (1) to us until we receive a cumulative return on our contributed senior common equity interest, currently at 8%, and (2) then to the owner of the noncontrolling interest until they receive a cumulative return on their contributed junior common equity interest, currently at 8%, and (3) then 75% to us and 25% to the owner of the noncontrolling interest until we both receive a cumulative return on our contributed senior common equity interest, currently at 12%, and (4) finally, any remaining operating profit shall be distributed 70% to us and 30% to the owner of the noncontrolling interest. Additionally, the noncontrolling interest in the Ritz Coconut Grove has the right to put their ownership interest to us for cash consideration at any time during the life of the venture. The balance sheets and financial results of the Ritz Coconut Grove are included in our consolidated financial statements and book value of the noncontrolling interest in the Ritz Coconut Grove is classified as temporary equity within our Consolidated Balance Sheets. The noncontrolling interest in the Ritz Coconut Grove was initially measured at fair value upon formation of the joint venture and will be subsequently measured at the greater of historical cost or the put option redemption value. For the three and six months ended June 30, 2020, based on the income allocation methodology described above, the noncontrolling interest in this joint venture was allocated losses of $0. For the three and six months ended June 30, 2019, the noncontrolling interest in the joint venture was allocated losses of $0 and $300, respectively. This is recorded as part of the Loss Allocated to Noncontrolling Interests line item within the Consolidated Statements of Operations. On June 30, 2020 we reclassified $3,196 from Noncontrolling Joint Venture Interest to Additional Paid in Capital to recognize the noncontrolling interest at the put option redemption value of $0.

Shareholders’ Equity

Terms of the Series C, Series D, and Series E Preferred Shares outstanding at June 30, 2020 and December 31, 2019 are summarized as follows:

15

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

							Dividend Per Share
	Shares Outstanding						Six Months Ended June 30,
Series	June 30, 2020	December 31, 2019	Aggregate Liquidation Preference		Distribution Rate		2020	2019
Series C	3,000,000	3,000,000	$	75,000	6.875	%	—	$	0.8594
Series D	7,701,700	7,701,700	$	192,500	6.500	%	—	$	0.8126
Series E	4,001,514	4,001,514	$	100,000	6.500	%	—	$	0.8126
Total	14,703,214	14,703,214

Liquidity and Management's Plan

Due to the COVID-19 pandemic and the effects of travel restrictions both globally and in the United States, the hospitality industry has experienced drastic drops in demand. The global impact of the pandemic has been rapidly evolving and, in the United States, certain states and cities, including most where we own properties, have reacted by instituting various restrictive measures such as quarantines, restrictions on travel, school closings, "stay at home" rules and restrictions on types of business that may continue to operate. During the first quarter of 2020 as a result of the impact of the COVID-19 pandemic, we had temporarily closed 21 of our 48 hotels while our remaining hotels operated in a significantly reduced capacity. During the second quarter of 2020 we reopened 5 hotels, resulting in 16 hotels remaining closed as of June 30, 2020. We believe the ongoing effects of the COVID-19 pandemic on our operations have had, and will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because the lodging industry has not previously experienced such an abrupt and drastic reduction in hotel demand, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration, and speed of the pandemic is uncertain and we cannot estimate when travel demand will recover. As a consequence, we cannot estimate the impact on our business, financial condition, or operating results with reasonable certainty, but we expect a net loss on a U.S. GAAP basis for the year ending December 31, 2020. On April 2, 2020, we amended our existing Credit Agreement (as defined below) and received $100,000 in available funds on our Line of Credit (as defined below), of which we drew $25,000 during April 2020 and $10,000 during July 2020. Additionally, the amendment provided a waiver of covenants under our Credit Facility (as defined below) through March 31, 2021 and changed the Credit Facility from an unsecured borrowing facility to a secured borrowing facility. Based on this amendment along with cost savings measures throughout our operations, we believe that we will be able to generate sufficient liquidity to satisfy our obligations for the next twelve months, absent a breach of Credit Facility covenants described below.

At June 30, 2020, we were in compliance with all debt covenants related to our mortgage borrowings with the exception of one mortgage where we failed a debt service coverage ratio requirement, which is not considered an event of default but triggers a cash escrow requirement related to future debt service. We have one mortgage borrowing in the amount of $25,000 that will mature within the next twelve months, which we expect to be able to extend the maturity based on the provisions within the existing mortgage or refinance the mortgage. After considering the effect of the COVID-19 pandemic on our consolidated operations, it is probable that we will fail certain financial covenants within certain property-level mortgage borrowings or under our Credit Facility within the next twelve months. We have received financial covenant waivers from certain of our mortgage lenders, which provided us relief from financial covenants for a period of time that does not extend beyond the first quarter of 2021. For mortgages with financial covenants, the lenders' remedy of a covenant failure would be a requirement to escrow funds for the purpose of meeting our future debt payment obligations, with the exception of one mortgage borrowing. In this instance, the lender could require prepayment of the mortgage in full, however, we believe we would have sufficient available funds on our Credit Facility to accommodate this remedy of covenant default. As noted above, the covenant waivers on our Credit Facility extend through March 31, 2021; however, we believe that it is probable we will breach certain of our Credit Facility covenants when measured for the period ended June 30, 2021. This potential event of default could lead to potential acceleration of amounts due under the Credit Facility. Notwithstanding our belief that we

16

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

probably will be successful in renegotiating the terms of our Credit Facility prior to an event of default, we believe that we will continue to have access to the capital markets. Also, we could choose to raise cash by selling hotel properties, although there can be no assurances we would be successful on terms favorable to us.

Management’s primary mitigation plan to avoid a default under its Credit Agreement is to obtain a further waiver from its creditors or amend the Credit Facility in a manner to avoid an event of default. There can be no assurance that we will be able to obtain a waiver or amendment in a timely manner, or on acceptable terms, if at all. The failure to obtain a waiver or amendment, or otherwise repay the debt, could lead to an event of default, which would have a material adverse effect on our financial condition, which gives rise to substantial doubt about our ability to continue as a going concern. As a result, management determined that the future valuation and ability to realize the benefits of our deferred tax assets is not probable and we have recorded a full valuation allowance against our net deferred tax assets as of June 30, 2020.

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.

Identifiable assets, liabilities, and noncontrolling interests 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.

Properties intended to be sold are designated as “held for sale” on the balance sheet. In accordance with ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations, we evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.

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.

17

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

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 June 30, 2020, based on our analysis and given consideration to the impairment charge taken on one of our hotels held for sale, we have determined that the estimated future cash flow of each of the properties in our portfolio is sufficient to recover its carrying value.

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. As a result of identified structural risks of interbank offered rates, in particular, the London Interbank Offered Rate (LIBOR), reference rate reform is underway to identify alternative reference rates that are more observable or transaction based. The update provides guidance in accounting for changes in contracts, hedging relationships, and other transactions as a result of this reference rate reform. The optional expedients and exceptions contained within this update, in general, only apply to contract amendments and modifications entered into prior to January 1, 2023. The provisions of this update that will most likely affect our financial reporting process relate to modifications of contracts with lenders and the related hedging contracts associated with each respective modified borrowing contract. In general, the provisions of the update would benefit the Company by allowing, among other things, the following:

•Allowing modifications of debt contracts with lenders that fall under the guidance of ASC Topic 470 to be accounted for as a non-substantial modification and not be considered a debt extinguishment.

•Allowing a change to contractual terms of a hedging instrument in conjunction with reference rate reform to not require a dedesignation of the hedging relationship.

•Allowing a change to the interest rate used for margining, discounting, or contract price alignment for a derivative that is a cash flow hedge to not be considered a change to the critical terms of the hedge and will not require a dedesignation of the hedging relationship.

We have not entered into any contract modifications yet, as it directly relates to reference rate reform but we anticipate having to undertake such modifications in the future as a majority of our contracts with lenders and hedging counterparties are indexed to LIBOR. While we anticipate the impact of this update to be to the benefit of the Company, we are still evaluating the overall impact to the Company.

18

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 2 - INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consists of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Land	$	505,156	$	518,243
Buildings and Improvements	1,686,057		1,710,621
Furniture, Fixtures and Equipment	297,465		294,527
Construction in Progress	4,706		10,202
	2,493,384		2,533,593
Less Accumulated Depreciation	(590,920)		(557,620)
Total Investment in Hotel Properties *	$	1,902,464	$	1,975,973

* The net book value of investment in hotel property at Ritz Coconut Grove, which is a variable interest entity, is $44,139 and $44,854 at June 30, 2020 and December 31, 2019, respectively.

Acquisitions

For the six months ended June 30, 2020 and 2019, we acquired no hotel properties.

Hotel Dispositions

For the six months ended June 30, 2020 and 2019, we disposed of no hotel properties.

19

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

Assets Held For Sale

We have classified two assets as held for sale as of June 30, 2020. The sales of Duane Street Hotel and Blue Moon Hotel are expected to close in 2020 and are included as held for sale assets as of June 30, 2020. During the second quarter of 2020, the Company amended the purchase and sale agreement with the buyer of the hotel to reduce the purchase price by $2,000. As a result of the reduced sales price and after consideration of selling costs to the Company, management determined that the carrying value of the hotel exceeded the anticipated net proceeds from sale, resulting in a $1,069 impairment charge recorded during the three months ended June 30, 2020.

The table below shows the balances for the properties that were classified as assets held for sales as of June 30, 2020.

	June 30, 2020
Land	$	13,087
Buildings and Improvements	35,482
Furniture, Fixtures and Equipment	6,418
	54,987
Less Accumulated Depreciation	(14,817)
Assets Held for Sale	$	40,170

20

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 3 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of June 30, 2020 and December 31, 2019, our investment in unconsolidated joint ventures consisted of the following:

		Percent
Joint Venture	Hotel Properties	Owned		June 30, 2020		December 31, 2019
Cindat Hersha Owner JV, LLC	Hilton and IHG branded hotels in NYC	31	%	$	—	$	—
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50	%	555		1,434
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50	%	—		—
SB Partners Three, LLC	Home2 Suites, South Boston, MA	50	%	6,972		7,012
				$	7,527	$	8,446

On January 3, 2020, we entered into an agreement with our joint venture partner for our partner to purchase our membership interests in Hiren Boston, LLC and SB Partners, LLC. Net proceeds from the sale of our interests are anticipated to be approximately $26,000 and this transaction is expected to close during the fourth quarter of 2020.

Income/Loss Allocation

Cindat Hersha Owner JV, LLC cash available for distribution will be distributed to (1) Cindat until they receive a return on their contributed $143,650 senior common equity interest, currently at 8%, and (2) then to us until we receive an 8% return on our contributed $64,357 junior common equity interest. Any cash available for distribution remaining will be split 31% to us and 69% to Cindat. Cindat’s senior common equity return is reduced by 0.5% annually for 4 years following the closing until it is set at a rate of 8% for the remainder of the life of the joint venture.  As of June 30, 2020, based on the income allocation methodology described above, the Company has absorbed cumulative losses equal to our accounting basis in the joint venture resulting in a $0 investment balance in the table above, however, we currently maintain a positive equity balance within the venture. This difference is due to difference in our basis inside the venture versus our basis outside of the venture, which is explained later in this note.

For SB Partners, LLC, Hiren Boston, LLC, and SB Partners Three, LLC, income or loss is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. This results in an income allocation consistent with our percentage of ownership interests.

Any difference between the carrying amount of any of our investments noted above and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets. 

21

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

Income (loss) recognized during the three and six months ended June 30, 2020 and 2019, for our investments in unconsolidated joint ventures is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cindat Hersha Owner JV, LLC	$	—	$	—	$	—	$	—
Hiren Boston, LLC	(477)		315		(880)		138
SB Partners, LLC	—		—		(600)		375
SB Partners Three, LLC	(25)		(16)		(40)		(33)
(Loss) Income from Unconsolidated Joint Venture Investments	$	(502)	$	299	$	(1,520)	$	480

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 June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019.

Balance Sheets

	June 30, 2020		December 31, 2019
Assets
Investment in Hotel Properties, Net	$	584,038	$	579,287
Other Assets	28,359		33,891
Total Assets	$	612,397	$	613,178
Liabilities and Equity
Mortgages and Notes Payable	$	445,533	$	430,282
Other Liabilities	22,452		19,185
Equity:
Hersha Hospitality Trust	7,996		9,588
Joint Venture Partner(s)	136,977		154,998
Accumulated Other Comprehensive Loss	(561)		(875)
Total Equity	144,412		163,711
Total Liabilities and Equity	$	612,397	$	613,178

22

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

Statements of Operations

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Room Revenue	$	5,588	$	26,995	$	16,932	$	43,346
Other Revenue	—		622		787		1,243
Operating Expenses	(3,265)		(11,890)		(11,613)		(21,921)
Lease Expense	(170)		(164)		(354)		(365)
Property Taxes and Insurance	(3,154)		(3,051)		(6,438)		(6,103)
General and Administrative	(553)		(1,505)		(1,516)		(2,711)
Depreciation and Amortization	(3,925)		(3,694)		(7,840)		(7,354)
Interest Expense	(5,582)		(7,196)		(11,869)		(14,343)
Net (Loss) Income	$	(11,061)	$	117	$	(21,911)	$	(8,208)

The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of June 30, 2020 and December 31, 2019.

	June 30, 2020		December 31, 2019
Our share of equity recorded on the joint ventures' financial statements	$	7,996	$	9,588
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)	(469)		(1,142)
Investment in Unconsolidated Joint Ventures	$	7,527	$	8,446

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

•the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements;

•accumulated amortization of our equity in joint ventures that reflects the difference in our portion of the fair value of joint ventures' assets on the date of our investment when compared to the carrying value of the assets recorded on the joint ventures’ financial statements (this excess or deficit investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on our consolidated statement of operations); and

•cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements, if any. 

23

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 4 - OTHER ASSETS

Other Assets

Other Assets consisted of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Derivative Asset	$	—	$	2,514
Deferred Financing Costs	3,019		1,330
Prepaid Expenses	6,189		11,279
Investment in Statutory Trusts	1,548		1,548
Investment in Non-Hotel Property and Inventories	2,714		2,987
Deposits with Unaffiliated Third Parties	2,575		2,577
Deferred Tax Asset, Net of Valuation Allowance of $20,363 and $497, respectively	—		11,390
Property Insurance Receivable	1,788		1,788
Other	3,163		2,764
	$	20,996	$	38,177

Derivative Asset – This category represents the Company’s gross asset fair value of interest rate swaps and interest rate caps.  Any swaps and caps resulting in a liability to the Company are accounted for separately within Other Liabilities on the Balance Sheets.

Deferred Financing Costs – This category represents financing costs paid by the Company to establish our Line of Credit. These costs have been capitalized and will amortize to interest expense over the life of the Line of Credit.

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

Investment in Statutory Trusts – We have an investment in the common stock of Hersha Statutory Trust I and Hersha Statutory Trust II.

Investment in Non-Hotel Property and Inventories – This category represents the costs paid and capitalized by the Company for items such as office leasehold improvements, furniture and equipment, and property inventories.

Deposits with Unaffiliated Third Parties – These deposits represent deposits made by the Company with unaffiliated third parties for items such as lease security deposits, utility deposits, and deposits with unaffiliated third party management companies.

Deferred Tax Asset – We have recorded a valuations allowance resulting in net deferred tax assets of $0 as of June 30, 2020. We have considered various factors, including future reversals of existing taxable temporary differences, future taxable income and tax planning strategies in determining the ability to realize the benefits of our deferred tax assets. In Note 1, we also disclosed factors that have given rise to substantial doubt in our ability to continue as a going concern, which is a primary factor in our determination that a full valuation allowance against our net deferred tax assets was appropriate to record during the three months ended June 30, 2020.

Property Insurance Receivable – This category represents the amount that we expect to receive from our insurance companies for reimbursement of costs incurred as a result of water damage at The Boxer.

24

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 5 - DEBT

Mortgages

Mortgages payable at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020		December 31, 2019
Mortgage Indebtedness	$	333,298	$	333,948
Net Unamortized Premium	585		821
Net Unamortized Deferred Financing Costs	(2,112)		(2,489)
Mortgages Payable	$	331,771	$	332,280

Net Unamortized Deferred Financing Costs associated with entering into mortgage indebtedness are deferred and amortized over the life of the mortgages. Net Unamortized Premiums are also amortized over the remaining life of the loans.

Mortgage indebtedness balances are subject to fixed and variable interest rates, which ranged from 2.16% to 6.30% as of June 30, 2020. Aggregate interest expense incurred under the mortgage loans payable totaled $3,031 and $4,077, and $6,516 and $8,067, during the three and six months ended June 30, 2020 and 2019, respectively. The impact on interest expense related to the interest rate swap contracts on mortgages resulted in expense of $552 and $585 for the three and six months ended June 30, 2020 and a decrease to interest expense of $99 and $196 for the three and six months ended June 30, 2019.

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 all debt covenants contained in the loan agreements securing our consolidated hotel properties with the exception of one mortgage were met as of June 30, 2020. The failure of meeting a minimum debt service coverage ratio requirement in this one mortgage is not considered an event of default under the loan agreement but rather, triggers a cash escrow requirement related to future debt service.

As of June 30, 2020, the maturity dates for the outstanding mortgage loans ranged from January 2021 to September 2025.

Unsecured 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 of notes issued to each of Hersha Statutory Trust I and Hersha Statutory Trust II bear interest at a variable rate of LIBOR plus 3% per annum. This rate resets 2 business days prior to each quarterly payment. The face value of the notes payable is offset by $785 and $812 as of June 30, 2020 and December 31, 2019, respectively, in net deferred financing costs incurred as a result of entering into these indentures. The deferred financing costs are amortized over the life of the notes payable. The weighted average interest rate on our two junior subordinated notes payable was 4.08% and 5.64%, and 4.45% and 5.66%, during the three and six months ended June 30, 2020 and 2019, respectively. Interest expense on Unsecured Notes Payable in the amount of $532 and $734, and $1,160 and $1,466, was recorded for the three and six months ended June 30, 2020 and 2019, respectively.

25

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 5 - DEBT (CONTINUED)

Credit Facilities as of June 30, 2020

We maintain three credit agreements which aggregate to $950,900 with Citigroup Global Markets Inc., Wells Fargo Bank, Inc. and various other lenders. Our credit agreement (the "Credit Agreement") provides for a $457,000 senior credit facility (“Credit Facility”). The Credit Facility consists of a $250,000 senior revolving line of credit (“Line of Credit”) and a $207,000 senior term loan ("First Term Loan"). The Credit Facility expires on August 10, 2022, and, provided no event of default has occurred, we may request that the lenders renew the Credit Facility for an additional one-year period. The Credit Facility is also expandable to $857,000 at our request, subject to the satisfaction of certain conditions.

We maintain another credit agreement which provides for a $300,000 senior term loan agreement (“Second Term Loan”) and expires on September 10, 2024.

A separate credit agreement provides for a $193,900 senior term loan agreement (“Third Term Loan” and collectively with the Credit Agreement and the Second Term Loan, the "Credit Agreements") and expires on August 2, 2021.

On April 2, 2020, the Company signed amendments to the Credit Agreements, which, among other things, changed each borrowing facility under the agreements from unsecured to secured. Additionally, the Company received $100,000 in available funds on its Line of Credit, of which $25,000 was drawn during April 2020 and $10,000 during July 2020.

The amount that we can borrow at any given time under our Line of Credit, and the individual term loans (each a “Term Loan” and together the “Term Loans”) is governed by certain operating metrics of designated hotel properties known as borrowing base assets. As of June 30, 2020, the following hotel properties secured the amended facilities under the Credit Agreements: 

- Courtyard, Brookline, MA	- Mystic Marriott Hotel & Spa, Groton, CT
- Holiday Inn Express, Cambridge, MA	- Hampton Inn, Washington, DC
- Envoy Hotel, Boston, MA	- Ritz Carlton, Washington, DC
- The Boxer, Boston, MA	- Hilton Garden Inn, M Street, Washington, DC
- Hampton Inn, Seaport, NY	- Residence Inn, Coconut Grove, FL
- The Duane Street Hotel, NY	- The Winter Haven, Miami, FL
- NU Hotel, Brooklyn, NY	- The Blue Moon, Miami, FL
- Holiday Inn Express, 29th Street, NY	- The Cadillac Hotel and Beach Club, Miami, FL
- The Gate JFK Airport, New York, NY	- The Parrot Key Hotel & Resort, Key West, FL
- Hilton Garden Inn, JFK Airport, New York, NY	- TownePlace Suites, Sunnyvale, CA
- Hyatt House White Plains, NY	- The Ambrose Hotel, Santa Monica, CA
- Sheraton, Wilmington South, DE	- Courtyard, San Diego, CA
- Hampton Inn, Philadelphia, PA	- The Pan Pacific Hotel, Seattle, WA
- The Rittenhouse, Philadelphia, PA	- The Westin, Philadelphia, PA

26

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 5 - DEBT (CONTINUED)

The interest rate for borrowings under the Line of Credit and Term Loans are based on a pricing grid with a range of one month U.S. LIBOR plus a spread. The following table summarizes the balances outstanding and interest rate spread for each borrowing:

		Outstanding Balance
Borrowing	Spread	June 30, 2020		December 31, 2019
Line of Credit	1.50% to 2.25%	$	95,000	$	48,000
Term Loan:
First Term Loan	1.45% to 2.20%	$	207,000	$	207,000
Second Term Loan	1.35% to 2.00%	300,000		300,000
Third Term Loan	1.45% to 2.20%	193,900		193,900
Deferred Loan Costs		(3,303)		(3,717)
Total Term Loan		$	697,597	$	697,183

The Company received a waiver of Credit Facility covenants through March 31, 2021 in connection with the April 2, 2020 amendment to the Credit Agreement. Upon expiration of the covenant waiver in March 2021, the following covenant requirements will again become effective. The Credit Facility and the Term Loans include certain financial covenants and require that we maintain: (1) a minimum tangible net worth (calculated as total assets, plus accumulated depreciation, less total liabilities, intangibles and other defined adjustments) of $1,119,500, plus an amount equal to 75% of the net cash proceeds of all issuances and primary sales of equity interests of the parent guarantor or any of its subsidiaries consummated following the closing date; (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 1.50 to 1.00;

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

- a maximum secured debt leverage ratio of 45%.

The Company recorded interest expense of $5,370 and $8,903, and $12,404 and $17,539, related to borrowings drawn on the Credit Facility and Term Loans for the three and six months ended June 30, 2020 and 2019, respectively. The impact on interest expense related to the interest rate swap contracts on the Credit Facility resulted in expense of $3,133 and $4,219 for the three and six months ended June 30, 2020 and a decrease to interest expense of $1,000 and $2,095 for the three and six months ended June 30, 2019. The weighted average interest rate, inclusive of the effect of derivative instruments, on the Credit Facility and Term Loans was 4.23% and 4.17%, and 4.21% and 4.15%, for the three and six months ended June 30, 2020 and 2019, respectively.

Paycheck Protection Program Loans

During the three months ended June 30, 2020, the Company applied for and received $18,936 in loans pursuant to the Paycheck Protection Program ("the PPP") under the Coronavirus Aid, Relief, and Economic Security Act. All funds borrowed under the PPP were returned without penalty during the three months ended June 30, 2020.

Deferred Financing Costs

As noted above, costs associated with entering into mortgages, notes payable and our credit facilities are deferred and amortized over the life of the debt instruments. The deferred costs related to mortgages and term loans and unsecured notes payable are presented as reductions in the respective debt balances. Amortization of deferred costs for the three and six months ended June 30, 2020 and 2019 was $702 and $560, and $1,267 and $1,134, respectively.

27

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 5 - DEBT (CONTINUED)

New Debt/Refinance

On April 2, 2020, we amended our Credit Agreements, which covered the Credit Facility and borrowing base of assets on the Line of Credit, to access an additional $100,000. With these amendments, we received waivers on all financial covenants through March 31, 2021. The proceeds from the borrowings drawn will be used to fund the operating expenses of the business. See "Liquidity, Capital Resources and Equity Offerings".

28

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 6 – LEASES

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides the principles for the recognition, measurement, presentation and disclosure of leases. The Company adopted the provisions of the update effective January 1, 2019. We elected the modified retrospective transition method upon adoption, which resulted in no cumulative-effect adjustment to the balance of opening retained earnings. As part of our adoption, we elected to utilize the package of practical expedients which allowed us to not reassess existing contracts for embedded leases and not reassess the classification of existing leases. As a result of our adoption, the Company recorded a lease liability and corresponding right of use asset of $55,515 at January 1, 2019 for leases where we are the lessee. Our most significant leases are land leases. We own five hotels within our consolidated portfolio of hotels where we do not own the land on which the hotels reside, rather we lease the land from an unrelated third-party lessor. All of our land leases are classified as operating leases and have initial terms, with extension options that range from May 2062 to October 2103. Based on the nature of these leases, the Company assumed that all extension options would be fully executed. For land leases that include variable payments, those include payments that are tied to an index such as the consumer price index or include rental payments based partially on the hotel's revenues. Two additional office space leases are also factored into the lease liability and are classified as operating leases with terms ranging from January 2022 to December 2027. For office space leases that include variable payments, those include payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance.

The Company applied judgments related to the determination of the discount rates used to calculate the lease liability upon adoption at January 1, 2019. Since the discount rate implicit in the leases could not be readily determinable, we calculated our incremental borrowing rate as prescribed by ASC Topic 842. We utilized judgments and estimates regarding the Company's market credit rating, comparable market bond yield curve, and adjustments to market yield curves to determine a securitized rate.

We are also a lessor in certain office space and retail lease agreements related to our hotels and the adoption of this ASU did not have a material impact on our accounting for leases where we are the lessor. The adoption of this ASU did not impact revenue recognition policies for the Company.

The components of lease costs for the three months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	1,050	$	121	$	1,171	$	973	$	121	$	1,094
Variable lease costs	8		87		95		141		88		229
Total lease costs	$	1,058	$	208	$	1,266	$	1,114	$	209	$	1,323

The components of lease costs for the six months ended June 30, 2020 and 2019 were as follows:

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	2,100	$	242	$	2,342	$	1,946	$	242	$	2,188
Variable lease costs	21		154		175		278		159		437
Total lease costs	$	2,121	$	396	$	2,517	$	2,224	$	401	$	2,625

29

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 6 – LEASES (CONTINUED)

Other information related to leases as of and for the six months ended June 30, 2020 and 2019 is as follows:

	June 30, 2020			June 30, 2019
Cash paid from operating cash flow for operating leases	$	1,951		$	2,188
Weighted average remaining lease term	64.2			64.2
Weighted average discount rate	7.86		%	7.85		%

30

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 7 – COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

Management Agreements

Our wholly-owned TRS, 44 New England Management Company, and certain of our joint venture entities engage eligible independent contractors in accordance with the requirements for qualification as a REIT under the Internal Revenue Code of 1986, as amended, including Hersha Hospitality Management Limited Partnership (“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 a term of five years 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 three and six months ended June 30, 2020 and 2019, base management fees incurred from HHMLP totaled $564 and $3,949, and $2,933 and $6,942, respectively, and are recorded as Hotel Operating Expenses. For the three and six months ended June 30, 2020 and 2019, 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 expenses for the three and six months ended June 30, 2020 and 2019 were $775 and $6,508, and $4,603 and $11,483, 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 three and six months ended June 30, 2020 and 2019, the Company incurred accounting fees of $319 and $315, and $644 and $631, respectively. For the three and six months ended June 30, 2020 and 2019, the Company incurred information technology fees of $103 and $102, and $208 and $203, respectively. Accounting fees and information technology fees are included in Hotel Operating Expenses.

Capital Expenditure Fees

HHMLP charges a 5% fee on certain 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 three and six months ended June 30, 2020 and 2019, we incurred fees of $56 and $989, and $956 and $1,513, respectively, which were capitalized with the cost of capital expenditures.

31

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

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

Acquisitions from Affiliates

We have entered into an option agreement with certain of our officers and 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.

Hotel Supplies

For the three and six months ended June 30, 2020 and 2019, we incurred charges for hotel supplies of $11 and $80, and $63 and $214, respectively. For the three and six months ended June 30, 2020 and 2019, we incurred charges for capital expenditure purchases of $176 and $3,882, and $1,056 and $4,417, 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 $26 and $9 is included in accounts payable for the purchase of hotel supplies at June 30, 2020 and December 31, 2019, respectively.

Insurance Services

The Company utilizes the services of the Hersha Group, a risk management business owned, in part, by certain executives and trustees of the Company. The Hersha Group provides consulting and procurement services to the Company related to the placement of property and casualty insurance, placement of general liability insurance, and for claims handling for our hotel properties. The total costs of property insurance that we paid through the Hersha Group were $1,388 and $1,269, and $2,984 and $2,706, for the three and six months ended June 30, 2020 and 2019, respectively. These amounts paid to the Hersha Group include insurance premiums, which are then paid to insurance carriers, and consulting procurement fees and claims handling as compensation for services.

Restaurant Lease Agreements with Independent Restaurant Group

The Company enters into lease agreements with a number of restaurant management companies for the lease of restaurants located within our hotels.  The Company previously entered into lease agreements with Independent Restaurant Group ("IRG") for restaurants at three of its hotel properties.  Jay H. Shah and Neil H. Shah, executive officers and/or trustees of the Company, collectively own a 70.0% interest in IRG.  The Company’s restaurant lease agreements with IRG generally provided for a term of five years and the payment of base rents and percentage rents, which were based on IRG’s revenue in excess of defined thresholds. Effective April 1, 2020, each of these lease agreements became a management agreement between the Company and IRG, subject to the supervision of HHMLP, as property manager. At the time of the conversion of the lease agreements to management agreements there was rent due of $103, which was forgiven due to the impact of the COVID-19 pandemic on the operations of our hotels and IRG's restaurants. The total amount of revenue recognized from IRG was $0 and $143 for the six months ended June 30, 2020 and 2019, respectively.

Due From Related Parties

The due from related parties balance as of June 30, 2020 and December 31, 2019 was approximately $2,363 and $6,113, respectively. The balances primarily consisted of working capital deposits made to HHMLP and other entities owned, in part, by certain executives and trustees of the Company.

Due to Related Parties

The balance due to related parties as of June 30, 2020 and December 31, 2019 was $0.

32

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[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 June 30, 2020, the Company’s derivative instruments represented the only financial instruments measured at fair value. Currently, the Company uses derivative instruments, such as interest rate swaps and caps, to manage its interest rate risk. 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 counter-party’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 counter-parties. However, as of June 30, 2020 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.

Derivative Instruments

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. The table on the following page presents our derivative instruments as of June 30, 2020 and December 31, 2019.

33

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

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

								Estimated Fair Value
								Asset / (Liability) Balance
Hedged Debt	Type	Strike Rate		Index	Effective Date	Derivative Contract Maturity Date	Notional Amount	June 30, 2020		December 31, 2019
Term Loan Instruments:
Credit Facility	Swap	1.341	%	1-Month LIBOR + 2.20%	October 3, 2019	August 2, 2021	150,000	(1,965)		539
Credit Facility	Swap	1.316	%	1-Month LIBOR + 2.20%	September 3, 2019	August 2, 2021	43,900	(563)		175
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.460	%	1-Month LIBOR + 2.00%	September 10, 2019	September 10, 2024	300,000	(15,695)		1,776
Mortgages:
Courtyard, LA Westside, Culver City, CA	Swap	1.683	%	1-Month LIBOR + 2.75%	August 1, 2017	August 1, 2020	35,000	—		(8)
Annapolis Waterfront Hotel, MD	Cap	3.350	%	1-Month LIBOR +2.65%	May 1, 2018	May 1, 2021	28,000	—		—
Hyatt, Union Square, New York, NY	Swap	1.870	%	1-Month LIBOR + 2.30%	June 7, 2019	June 7, 2023	56,000	(2,827)		(556)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn 52nd Street, New York, NY	Swap	1.540	%	1-Month LIBOR + 2.30%	December 4, 2019	December 4, 2022	44,325	(1,515)		23
Courtyard, LA Westside, Culver City, CA	Swap	0.495	%	1-Month LIBOR + 2.75%	June 1, 2020	August 1, 2021	35,000	(134)		—
								$	(32,971)	$	175

On June 1, 2020, we entered into an accelerated termination agreement on the interest rate swap associated with the $35,000 mortgage debt on the Courtyard LA Westside, which had an initial maturity of August 1, 2020. Also on June 1, 2020, we entered into a new interest rate swap associated with the $35,000 mortgage on the Courtyard LA Westside, which will mature on August 1, 2021. The fair value of the old swap at the time of termination was a liability in the amount of $67. Instead of settling this amount with cash consideration at termination, the rate and terms of the new swap were such that, the fair value at termination of the old swap would carry over as the fair value of the new swap at inception. The other comprehensive income related to the old swap will be reclassified to interest expense until the date of the original maturity date of August 1, 2020.

The fair value of swaps and our interest rate caps with a positive balance is included in other assets at June 30, 2020 and December 31, 2019. The fair value of our interest rate swaps with a negative balance is included in accounts payable, accrued expenses and other liabilities at June 30, 2020 and December 31, 2019.

The net change related to derivative instruments designated as cash flow hedges recognized as unrealized gains and losses reflected on our consolidated balance sheet in accumulated other comprehensive income was a loss of $792 and a loss of $5,234 for the three months ended June 30, 2020 and 2019, respectively, and a loss of $30,941 and a loss of $8,155 for the six months ended June 30, 2020 and 2019, respectively.

34

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

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

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 derivatives. The change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1,228 and $1,112 and $2,205 and $2,253 of net unrealized gains/losses from accumulated other comprehensive income as an increase/decrease to interest expense for the three and six months ended June 30, 2020 and 2019, respectively. For the next twelve months ending June 30, 2021, we estimate that an additional $14,197 will be reclassified as an increase to interest expense.

Fair Value of Debt

We estimate the fair value of our fixed rate debt and the credit spreads over variable market rates on our 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 June 30, 2020, the carrying value and estimated fair value of our debt were $1,175,131 and $1,150,217 respectively. As of December 31, 2019, the carrying value and estimated fair value of our debt were $1,128,199 and $1,098,082, respectively.

35

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 9 – SHARE BASED PAYMENTS

Our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan, as amended, (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. Pursuant to the 2012 Plan, equity may be awarded in the form of stock awards, LTIP Units, or performance share awards issuable.

The Short Term Incentive Program ("STIP") and the Long-Term Incentive Program ("LTIP") were incentive compensation programs the Compensation Committee of our Board of Trustees established to align executive compensation with the performance of the Company. Prior to 2019, executives participated in our legacy incentive compensation programs, including the Multi-Year Long Term Equity Incentive Program ("Multi-Year EIP").

On April 10, 2020, based on the achievement of certain metrics established under the 2019 STIP for the performance period ended December 31, 2019, the Compensation Committee awarded 833,539 LTIP Units. The awards issued pursuant to the STIP vest on December 31, 2021, the two year anniversary following the end of the performance period. On April 13, 2020, the Compensation Committee awarded 240,923 LTIP Units based on the achievement of certain metrics established under the 2017 Multi-Year EIP for the performance period ended December 31, 2019. Following the three year performance period, the awards issued pursuant to the 2017 Multi-Year EIP vest 50% on the date of issuance and 50% on December 31, 2020. The LTIP Units awarded under both the 2019 STIP and the 2017 Multi-Year EIP were determined by dividing the dollar amount of award earned by $3.58, the per share volume weighted average trading price of the Company’s common shares on the NYSE for the 20 trading days prior to April 13, 2020, the date of issuance.

A summary of our share based compensation activity from January 1, 2020 to June 30, 2020 is as follows:

	LTIP Unit Awards			Restricted Share Awards			Share Awards
	Number of Units	Weighted Average Grant Date Fair Value		Number of Restricted Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested Balance as of December 31, 2019	441,201	$	17.99	92,102	$	17.07	—
Granted	1,101,924	5.23		135,740	5.21		—	N/A
Vested	(120,459)	5.23		(75,384)	12.74		—	N/A
Forfeited	—	N/A		(113)	18.00		—	N/A
Unvested Balance as of June 30, 2020	1,422,666	$	9.19	152,345	$	8.65	—

36

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 9 – SHARE BASED PAYMENTS (CONTINUED)

The following table summarizes share based compensation expense for the three and six months ended June 30, 2020 and 2019 and unearned compensation as of June 30, 2020 and December 31, 2019:

	Share Based Compensation Expense								Unearned Compensation
	For the Three Months Ended				For the Six Months Ended				As of
	6/30/2020		6/30/2019		6/30/2020		6/30/2019		6/30/2020		12/31/2019
Issued Awards
LTIP Unit Awards	$	1,142	$	1,428	$	2,951	$	2,791	$	4,179	$	2,878
Restricted Share Awards	342		459		674		795		1,080		1,051
Share Awards	—		402		—		402		—		—
Unissued Awards
Market Based	315		430		630		689		2,110		2,739
Performance Based	—		755		—		755		—		—
Total	$	1,799	$	3,474	$	4,255	$	5,432	$	7,369	$	6,668

The weighted-average period of which the unrecognized compensation expense will be recorded is approximately 1.5 years for LTIP Unit Awards and 0.9 years for Restricted Share Awards.

The remaining unvested target units are expected to vest as follows:

	2020	2021	2022	2023
LTIP Unit Awards	524,540	898,126	—	—
Restricted Share Awards	3,784	144,376	3,654	531
	528,324	1,042,502	3,654	531

37

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

[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.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
NUMERATOR:
Basic and Diluted*
Net (Loss) Income	$	(71,780)	$	5,559	$	(97,752)	$	(2,323)
Loss allocated to Noncontrolling Interests	10,360		41		13,257		1,264
Distributions to Preferred Shareholders	(6,044)		(6,043)		(12,088)		(12,087)
Dividends Paid on Unvested Restricted Shares and LTIP Units	—		(271)		—		(553)
Net Loss applicable to Common Shareholders	$	(67,464)	$	(714)	$	(96,583)	$	(13,699)
DENOMINATOR:
Weighted average number of common shares - basic	38,609,922		39,127,385		38,587,011		39,121,421
Effect of dilutive securities:
Restricted Stock Awards and LTIP Units (unvested)	—		—		—		—
Contingently Issued Shares and Units	—		—		—		—
Weighted average number of common shares - diluted	38,609,922		39,127,385		38,587,011		39,121,421

*Income (loss) allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units and Vested LTIP Units have been omitted from the denominator for the purpose of computing diluted earnings per share since 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) applicable to common shareholders.

38

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

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

Interest paid during the six months ended June 30, 2020 and 2019 totaled $21,488 and $27,802 respectively. Net Cash paid on Interest Rate Derivative contracts during the six months ended June 30, 2020 and 2019 totaled $1,505 and $(2,443) respectively. Cash paid for income taxes during the six months ended June 30, 2020 and 2019 totaled $233 and $466, respectively. The following non-cash investing and financing activities occurred during the six months ended June 30, 2020 and 2019:

	2020		2019
Common Shares issued as part of the Dividend Reinvestment Plan	$	14	$	42
Issuance of share based payments	6,404		12,119
Accrued payables for capital expenditures placed into service	1,398		1,268
Adjustment to Record Noncontrolling Interest at Redemption Value	(3,196)		148
Adjustment to Record Right of Use Asset & Lease Liability	—		55,515

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019:

	2020		2019
Cash and cash equivalents	$	23,228	$	36,780
Escrowed cash	7,374		10,767
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	30,602	$	47,547

Amounts included in restricted cash represent those required to be set aside in escrow by contractual agreement with various lenders for the payment of specific items such as property insurance, property tax, and capital expenditures.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

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, 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 and other reports filed by us with the SEC, including, but not limited to those discussed in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019 and in our subsequent Quarterly Reports on Form 10-Q, 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 maintain existing financing arrangements and our ability to obtain future financing arrangements or refinance or extend the maturity of existing financing arrangements as they come due;

● our understanding of our competition;

● market trends;

● projected capital expenditures;

● the impact of and changes to various government programs, including in response to novel coronavirus, or COVID-19;

● the timing of the development of any effective cure or treatment for COVID-19;

● our access to capital on the terms and timing we expect;

● the restoration of public confidence in domestic and international travel;

● permanent structural changes in demand for conference centers by business and leisure clientele;

● our ability to dispose of selected hotel properties on the terms and timing we expect, if at all; and

● our ability to reopen our nonoperational hotels on the terms and timing we expect, if at all;

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.

Important factors that we think could cause our actual results to differ materially from expected results are summarized below. One of the most significant factors, however, is the ongoing impact of the current outbreak of the novel coronavirus on the United States, regional and global economies, the broader financial markets, our customers and employees, governmental responses thereto and the operation changes we have and may implement in response thereto. The current outbreak of COVID-19 has also impacted, and is likely to continue to impact, directly or indirectly, many of the other important factors below.

New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In particular, it is difficult to fully assess the impact of COVID-19 at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak domestically and internationally and the effectiveness of federal, state and local governments’ efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on the U.S. economy and economic activity.

The following non-exclusive list of factors could also cause actual results to vary from our forward-looking statements:

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● 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;

● decreased international travel because of geopolitical events, including terrorism and current U.S. government policies such as immigration policies, border closings, and travel bans related to COVID-19;

● 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;

● increased interest rates and operating costs;

● ability to complete development and redevelopment projects;

● risks associated with potential dispositions of hotel properties;

● availability of and our ability to retain qualified personnel;

● decreases in tourism due to pandemics, geopolitical instability or changes in foreign exchange rates;

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

● environmental uncertainties and risks related to natural disasters and increases in costs to insure against those risks;

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

● the uncertainty and economic impact of pandemics, epidemics, or other public health emergencies or fear of such events, such as the recent outbreak of COVID-19;

● the current COVID-19 pandemic had, and will continue to have, adverse effects on our financial conditions, results of operations, cash flows, and performance for an indefinite period of time. Future pandemics may also have adverse effects on our financial condition, results of operations, cash flows, and performance;

● world events impacting the ability or desire of people to travel may lead to a decline in demand for hotels; and

● the factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 under the heading “Risk Factors,” in our subsequent Quarterly Reports on Form 10-Q and in other reports we file with the SEC from time to time.

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.

BACKGROUND

As of June 30, 2020, we owned interests in 48 hotels in major urban gateway markets including New York, Washington DC, Boston, Philadelphia, San Diego, Los Angeles, Seattle, and Miami, including 38 wholly-owned hotels, 1 hotel through our interest in a consolidated joint venture, and interests in 9 hotels owned through unconsolidated joint ventures. We also entered into a joint venture during the third quarter of 2018 that is constructing a new hotel adjacent to two existing hotels partially owned by us through separate, unconsolidated joint venture interests. 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 June 30, 2020, 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.

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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

At the beginning of the year, we expected that we would achieve operating results for 2020 that would outperform other market participants due to the strong performance anticipated from newly renovated and upgraded hotels in our portfolio, primarily led by our hotels in South Florida. We started 2020 off on solid footing with our comparable portfolio achieving RevPAR growth through the end of February 2020 but this was quickly erased as a result of the global economic slowdown caused by the COVID-19 pandemic. As a result of the pandemic and subsequent government mandates and health official recommendations, hotel demand was substantially reduced across the United States.

Following the government mandates and health official recommendations, and after evaluating the cost of running our respective properties at low occupancy levels versus closing the properties, we originally closed 21 of our 48 hotels properties and dramatically reduced staffing. As of June 30, 2020, we had 32 hotels operating while 16 hotels remained closed. We had 21 of our wholly-owned hotels that have been opened for the entirety of the second quarter of 2020, and these hotels experienced increased occupancy levels during the second quarter of 2020, including our open New York City hotels, which generated 61% occupancy. While travel restrictions have slowly eased in a few markets and leisure demand began to recover late in the second quarter, group and business travel are unlikely to rebound quickly. As of August 1, 2020 we had 33 hotels open and by the end of the third quarter 2020, we anticipate having 44 of our 48 hotels open assuming there is no significant increase in COVID-19 cases or government mandated closures.

In addition to our focus on strategically reopening hotels and driving occupancy at these hotels, we have remained focused on executing expense mitigation measures and shoring up our liquidity position as we continue to face a challenging operating environment. The suspension of our common and preferred dividends, which is expected to last through at least the end of 2020, is expected to reduce our cash expenditures by $72.5 million on an annualized basis when compared to dividends we declared in 2019. We have also deferred certain planned capital expenditures for 2020 with an anticipated cash savings of between $10.0 million to $15.0 million for 2020. In April 2020, we amended our existing Credit Facility, which granted us a waiver of our covenants under the Credit Facility through March 31, 2021 and provided us with additional availability under the Credit Facility of $100 million, of which $25,000 was drawn in April 2020 and $10,000 during July 2020.

The manner in which the ongoing COVID-19 pandemic will be resolved or the manner that the hospitality and tourism industries will return to historical performance norms, and whether the economy will contract or grow are not reasonably predictable. As a result, there can be no assurances that we will be able achieve the hotel operating metrics or the results at our properties we have forecasted. Factors that might contribute to less-than-anticipated performance include those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 in our subsequent Quarterly Reports on Form 10-Q, and other documents that we may file with the SEC in the future, including this Quarterly Report on Form 10-Q. We will continue to cautiously monitor lodging demand and rates, our third-party hotel managers, and our performance generally.

SUMMARY OF OPERATING RESULTS

COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019

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

Revenue

Our total revenues for the three months ended June 30, 2020 consisted of hotel operating revenues and other revenue. Hotel operating revenues were approximately 99% of total revenues for the three months ended June 30, 2020 and 2019. Hotel operating revenues are recorded for wholly-owned hotels that are leased to our wholly owned TRS and hotels owned through joint venture or other interests that are consolidated in our financial statements. Hotel operating revenues decreased $130,101, or 88.2%, to $17,412 for the three months ended June 30, 2020 compared to $147,513 for the same period in 2019.  This decrease is attributable to the reduction in operations across our portfolio due to the decrease in demand caused by the COVID-19 pandemic. Management expects hotel operating revenues to remain at a decreased level until business and leisure activities return to pre-pandemic levels, which we have no way to predict at this time.

42

Expenses

Total hotel operating expenses decreased 77.8% to approximately $18,378 for the three months ended June 30, 2020 from $82,610 for the three months ended June 30, 2019. The decrease in hotel operating expenses can be explained by the temporary closure of certain of our hotels and reduced operations at the remaining hotels as a result of the decrease in demand caused by the COVID-19 pandemic.

Depreciation and amortization increased by 1.5%, or $358, to $24,322 for the three months ended June 30, 2020 from $23,964 for the three months ended June 30, 2019.

Real estate and personal property tax and property insurance increased $972, or 10.8%, for the three months ended June 30, 2020 when compared to the same period in 2019. This increase is mostly related to increased real estate tax that had been re-assessed by the applicable taxing authority, resulting in increases in real estate tax expense for the quarter as we had to cumulatively catch up, in certain instances, our estimated tax accruals at the time of the new assessment receipt during the quarter. We typically experience increases in tax assessments and tax rates as the economy improves which could be offset by reductions resulting from successful real estate tax appeals.

General and administrative expense decreased by 48.3%, or approximately $3,913, from $8,100 in the three months ended June 30, 2019 to $4,187 for the same period in 2020. General and administrative expense includes expenses related to payroll, rents, and other corporate level administrative costs as well as non-cash share based payments issued as incentive compensation to the Company’s trustees, executives, and employees.  Execution of our cost containment strategies resulted in a decrease of $2,235 in our payroll and other administrative costs. Expenses related to non-cash share based compensation decreased $1,675 when comparing the three months ended June 30, 2020 to the same period in 2019. Please refer to “Note 9 – Share Based Payments” of the notes to the consolidated financial statements for more information about our share based compensation.

Operating Loss

Operating Loss for the three months ended June 30, 2020 was $41,542 compared to operating income of $22,716 during the same period in 2019. Our operating loss for the second quarter 2020 compared to operating income for the same period in 2019 was largely the result of the second quarter of 2020 hotel operating revenues decreasing at a larger rate than hotel operating expenses, both of which are the result of decreased operations across our portfolio due to the COVID-19 pandemic. Additionally, we experienced increases in real estate taxes and insurance, and depreciation and amortization expense during the second quarter of 2020 compared to 2019.

Interest Expense

Interest expense increased $156 from $13,325 for the three months ended June 30, 2019 to $13,481 for the three months ended June 30, 2020. The balance of our borrowings, excluding discounts and deferred costs, have increased by $57,036 in total between June 30, 2019 and June 30, 2020, as we drew $58,000, net on our Line of Credit and had a net decrease in mortgages payable of $963. The primary driver of our increased interest expense is due to increases in overall balance; however, the decrease in weighted average interest rates related to our Credit Facility almost offset the increase due to balance growth.

Loss from Impairment of Assets

During the three months ended June 30, 2020, the Company recorded an impairment charge of $1,069 related to the Duane Street Hotel, which is held for sale as of June 30, 2020. During the second quarter of 2020, the Company amended the purchase and sale agreement with the buyer of the hotel to reduce the purchase price by $2,000. As a result of the reduced sales price and after consideration of selling costs to the Company, management determined that the carrying value of the hotel exceeded the anticipated net proceeds from sale, resulting in the impairment charge.

Income Tax Expense

During the three months ended June 30, 2020, the Company recorded an income tax expense of $15,872 compared to an income tax expense of $4,031 for the three months ended June 30, 2019. After considering various factors, including future reversals of existing taxable temporary differences, future taxable income and tax planning strategies, we believe it is no longer more likely than not that we will realize our deferred tax assets. During the three months ended June 30, 2020 we recorded a valuation allowance of $19,866 resulting in net deferred tax assets of $0 as of June 30, 2020.  The amount of

43

income tax expense or benefit that the Company typically records depends mostly on the amount of taxable income or loss that is generated by our consolidated taxable REIT subsidiaries (“TRS”). 

Net Loss Applicable to Common Shareholders

Net loss applicable to common shareholders for the three months ended June 30, 2020 was $67,464 compared to net loss of $443 during the same period in 2019. This increase in loss was primarily related to the decreased operating income and increased income tax expense during the three months ended June 30, 2020, as discussed above. Partially offsetting the increase is loss being absorbed by the noncontrolling interests.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019

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

Revenue

Our total revenues for the six months ended June 30, 2020 consisted of hotel operating revenues and other revenue. Hotel operating revenues were approximately 99% of total revenues for the six months ended June 30, 2020 and 2019. Hotel operating revenues are recorded for wholly-owned hotels that are leased to our wholly owned TRS and hotels owned through joint venture or other interests that are consolidated in our financial statements. Hotel operating revenues decreased $154,806, or 59.1%, to $107,350 for the six months ended June 30, 2020 compared to $262,156 for the same period in 2019.  This decrease is attributable to the reduction in operations across our portfolio due to the decrease in demand caused by the COVID-19 pandemic. During the six months ended June 30, 2020, our hotel portfolio experienced a decrease in RevPAR as a result of local stay-at-home orders and business restrictions implemented by local governments and national restrictions on travel. Management expects hotel operating revenues to remain at a decreased level until business and leisure activities return to pre-pandemic levels, which we have no way to predict at this time.

Expenses

Total hotel operating expenses decreased 46.8% to approximately $83,897 for the six months ended June 30, 2020 from $157,721 for the six months ended June 30, 2019. The decrease in hotel operating expenses can be explained by the temporary closure of certain of our hotels and reduced operations at the remaining hotels as a result of the decrease in demand caused by the COVID-19 pandemic.

Depreciation and amortization increased by 0.9%, or $418, to $48,510 for the six months ended June 30, 2020 from $48,092 for the six months ended June 30, 2019.

Real estate and personal property tax and property insurance increased $1,517, or 8.2%, for the six months ended June 30, 2020 when compared to the same period in 2019. This increase is mostly related to increased real estate tax that had been re-assessed by the applicable taxing authority, resulting in increases in real estate tax expense for the quarter as we had to cumulatively catch up, in certain instances, our estimated tax accruals at the time of the new assessment receipt during the quarter. We typically experience increases in tax assessments and tax rates as the economy improves which could be offset by reductions resulting from successful real estate tax appeals.

General and administrative expense decreased by 26.9%, or approximately $3,679, from $13,700 in the six months ended June 30, 2019 to $10,021 for the same period in 2020. General and administrative expense includes expenses related to payroll, rents, and other corporate level administrative costs as well as non-cash share based payments issued as incentive compensation to the Company’s trustees, executives, and employees. Execution of our cost containment strategies resulted in a decrease of $2,517 in our payroll and other administrative costs. Expenses related to non-cash share based compensation decreased $1,177 when comparing the six months ended June 30, 2020 to the same period in 2019. Please refer to “Note 9 – Share Based Payments” of the notes to the consolidated financial statements for more information about our share based compensation.

Operating Loss

Operating Loss for the six months ended June 30, 2020 was $57,951 compared to operating income of $22,163 during the same period in 2019. Our operating loss for the first half of 2020 compared to operating income during the same period in 2019 was largely the result of hotel operating revenues for the six months ended June 30, 2020 decreasing at a larger rate than hotel operating expenses, both of which are the result of decreased operations across our portfolio due to the

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COVID-19 pandemic. Additionally, we experienced increases in real estate taxes and insurance, and depreciation and amortization expense during the first half of 2020 compared to 2019.

Interest Expense

Interest expense increased $265 from $26,223 for the six months ended June 30, 2019 to $26,488 for the six months ended June 30, 2020. The balance of our borrowings, excluding discounts and deferred costs, have increased by $57,036 in total between June 30, 2019 and June 30, 2020, as we drew $58,000, net on our Line of Credit and had a net decrease in mortgages payable of $963. The primary driver of our increased interest expense is due to increases in overall balance; however, the decrease in weighted average interest rates related to our Credit Facility almost fully offset the increase due to balance growth.

Loss from Impairment of Assets

During the six months ended June 30, 2020, the Company recorded an impairment charge of $1,069 related to the Duane Street Hotel, which is held for sale as of June 30, 2020. During the second quarter of 2020, the Company amended the purchase and sale agreement with the buyer of the hotel to reduce the purchase price by $2,000. As a result of the reduced sales price and after consideration of selling costs to the Company, management determined that the carrying value of the hotel exceeded the anticipated net proceeds from sale, resulting in the impairment charge.

Income Tax Expense

During the six months ended June 30, 2020, the Company recorded an income tax expense of $11,374 compared to an income tax benefit of $1,233 for the six months ended June 30, 2019. After considering various factors, including future reversals of existing taxable temporary differences, future taxable income and tax planning strategies, we believe it is no longer more likely than not that we will realize our deferred tax assets. During the three months ended June 30, 2020 we recorded a valuation allowance of $19,866 resulting in net deferred tax assets of $0 as of June 30, 2020.  The amount of income tax expense or benefit that the Company typically records depends mostly on the amount of taxable income or loss that is generated by our consolidated taxable REIT subsidiaries (“TRS”). 

Net Loss Applicable to Common Shareholders

Net loss applicable to common shareholders for the six months ended June 30, 2020 was $96,583 compared to net loss of $13,146 during the same period in 2019, resulting in an increased loss of $83,437. This increase in loss was primarily related to the decreased operating income and increased income tax expense during the first half of 2020, as discussed above. Partially offsetting the increase in loss is the increase in loss being absorbed by the noncontrolling interests.

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LIQUIDITY, CAPITAL RESOURCES, AND EQUITY OFFERINGS

(dollars in thousands, except per share data)

We started 2020 off on solid footing with our comparable portfolio achieving RevPAR growth through the end of February 2020, but this was quickly erased as a result of the global economic slowdown caused by the COVID-19 pandemic. As a result of this pandemic and subsequent government mandates and health official recommendations, hotel demand was substantially reduced across the United States. Following the government mandates and health official recommendations, and after evaluating the cost of running our respective properties at low occupancy levels versus closing the properties, we initially closed 21 of our 48 hotel properties and dramatically reduced staffing. As of June 30, 2020, we had 32 hotels open while 16 hotels remained closed. For 21 of our wholly-owned hotels that have been open for the entirety of the second quarter, we experienced increased occupancy levels during the second quarter of 2020 with our New York City hotels generating 61% occupancy during the second quarter. While travel restrictions have slowly eased in a few markets and leisure demand began to recover late in the second quarter, group and business travel are unlikely to rebound quickly. As of August 1, 2020 we had 33 hotels open and by the end of the third quarter 2020, we anticipate having 44 of our 48 hotels open assuming there is no significant increase in COVID-19 cases or government-mandated closures.

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 all covenants contained in the loan agreements securing our hotel properties were met as of June 30, 2020, with the exception of one mortgage. This covenant failure was the result of a failure to maintain a minimum debt service coverage ratio at the mortgaged hotel. This covenant failure does not result in an event of default; rather, it triggers certain cash escrow requirements at the property.

We have debt facilities in the aggregate of $950,900 which is comprised of a $457,000 senior credit facility and two term loans totaling $493,900. The credit facility (“Credit Facility”) contains a $207,000 term loan (“First Term Loan”) and a $250,000 revolving line of credit (“Line of Credit”). This Credit Facility expires on August 10, 2022 and, provided no event of default has occurred, we may request that the lenders renew the credit facility for an additional one-year period. The Credit Facility is also expandable by $400,000 at our request, subject to the satisfaction of certain conditions. Our two additional term loans are $300,000 (“Second Term Loan”) and $193,900 (“Third Term Loan”), which mature on September 10, 2024 and August 2, 2021, respectively.

On April 2, 2020, we amended our existing Credit Agreement and received $100,000 in available funds on our Line of Credit, of which we drew $25,000 during April 2020 and $10,000 during July 2020. The amendment provided a waiver of covenants under our Credit Facility through March 31, 2021 and changed the Credit Facility from an unsecured borrowing facility to a secured borrowing facility. If we would breach certain of our Credit Facility covenants when measured for the period ended June 30, 2021, Management’s primary mitigation plan to avoid a default is to obtain a further waiver from its creditors or amend the Credit Facility in a manner to avoid an event of default. As of June 30, 2020, the outstanding balance under the First Term Loan was $207,000, under the Second Term Loan was $300,000, under the Third Term Loan was $193,900 and we had $95,000 outstanding under the Line of Credit.

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 June 30, 2020, we have $0 of mortgage indebtedness maturing on or before December 31, 2020. We have one mortgage borrowing in the amount of $25,000 that will mature within the next twelve months, which we expect to be able to extend the maturity based on the provisions within the existing mortgage or refinance the mortgage. 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 Line of Credit and the issuance of our securities.

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In addition to the incurrence of debt and the offering of equity securities, dispositions of property may serve as additional capital resources and sources of liquidity. We may recycle capital from stabilized assets or from sales of hotels. Capital from these types of transactions is intended to be utilized to pay down existing debt. As of June 30, 2020, we are not under any requirement to sell any properties as a matter of meeting debt obligations.

Acquisitions

During the six months ended June 30, 2020, we acquired no hotel properties. Given the current economic downturn and challenging operating environment facing the lodging industry, we are not currently exploring hotel acquisition opportunities as we focus on maintaining liquidity or reducing debt obligations, when possible. 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 upon 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 secured by hotel assets and under our Line of Credit.

Operating Liquidity and Capital Expenditures

As we find ourselves operating in a severely reduced capacity with 16 of our hotels temporarily closed due to decreased demand as a result of the COVID-19 pandemic, we expect to meet our short-term liquidity requirements generally through existing cash balances and borrowings under the Line of Credit. The ongoing effects of the COVID-19 pandemic on our operations have had, and will continue to have, a material negative impact on our financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic. While we believe that the net cash provided by borrowings drawn on the Line of Credit and any cash provided by operations in the coming year will be adequate to fund the Company’s operating requirements and monthly recurring debt service, we cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have not previously experienced such an abrupt and drastic reduction in hotel demand. The magnitude, duration, and speed of the pandemic is uncertain and, as a consequence, our ability to be predictive is uncertain and we cannot estimate the impact on our business, financial condition, or operating results with reasonable certainty. We have cancelled the payment of dividends for the first and second quarter of 2020 and anticipate not paying dividends for the remainder of 2020. Based on remaining funds available to us on our Line of Credit, along with cost savings measures throughout our operations, we believe that we will be able to generate sufficient liquidity to satisfy our obligations for the next twelve months, absent a breach of Credit Facility covenants.

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 if and when we will continue to make distributions to our shareholders. Due to the seasonality of our business, cash provided by operating activities fluctuates significantly from quarter to quarter in a normal operating period. Our Board of Trustees continues to evaluate the dividend policy in the context of our overall liquidity and market conditions and will determine when we are able to reinstate the dividend. Net cash used by operating activities for the six months ended June 30, 2020 was $16,357 and cash used for the payment of distributions and dividends for the six months ended June 30, 2020 was $18,051, which related to the dividend declared during the fourth quarter of 2019.

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 Line of Credit 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 six months ended June 30, 2020 decreased when compared to spending on capital improvements during the six months ended June 30, 2019. During the six months ended June 30, 2020, we spent $15,612 on capital expenditures to renovate, improve or replace assets at our hotels. This compares to $21,230 during the same period in 2019. These capital expenditures were undertaken to comply with brand mandated improvements and to initiate projects that we believe will generate a return on investment. In an effort to properly manage liquidity in the

47

current operating environment we are completing projects previously commenced and have deferred all other capital expenditure projects for the remainder of the year.

We may spend additional amounts, if necessary, to comply with the requirements of any franchise license under which any of our hotels operate and otherwise to the extent we deem such expenditures to be prudent. Currently, all brand mandated improvements have been deferred by the respective franchisors for the remainder of 2020. We are also obligated to fund the cost of certain capital improvements to our hotels. In addition to capital reserves required under certain loan agreements and capital expenditures to renovate, improve or replace assets at our hotels, we have opportunistically engaged in hotel development projects. In an effort to properly manage liquidity in the current operating environment we have sought or are currently in negotiations with our mortgage lenders to defer all payments into capital expenditure escrow accounts for a period of 6 months to a year.

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CASH FLOW ANALYSIS

(dollars in thousands, except per share data)

Comparison of the Six Months Ended June 30, 2020 and 2019

Net cash provided by operating activities decreased $63,228 from $46,871 for the six months ended June 30, 2019 to cash used by operating activities of $16,357 for the comparable period in 2020. In addition to the change in net income adjusted for non-cash items, the following items are the other contributing factors for the change in operating cash flow.

•Distributions received from unconsolidated joint ventures operations totaled $478 for the six months ended June 30, 2019 with no such proceeds in 2020.

•The remaining change in operating cash flows related to net changes in working capital assets and liabilities.

Net cash used in investing activities for the six months ended June 30, 2020 was $16,191 compared to net cash used in investing activities of $24,675 for the six months ended June 30, 2019. The following items are the major contributing factors for the change in investing cash flows:

•An increase in comparative cash flows of $5,618 related to a decrease in spending on capital expenditures for the six months ended June 30, 2020 compared to 2019.

•An increase in comparative cash flows of $3,400 related to a contribution of $600 to unconsolidated joint ventures for the six months ended June 30, 2020 compared to contributions of $4,000 made for the comparative period in 2019.

•A decrease in comparative cash flows of $1,022 related to distributions received from unconsolidated joint ventures during the six months ended June 30, 2019. No such distributions were received during 2020.

Net cash provided by financing activities for the six months ended June 30, 2020 was $26,165 compared to net cash used in financing activities for the six months ended June 30, 2019 of $15,432. The following items are the major contributing factors for the change in financing cash flows:

•An increase in comparative cash flows as we drew $20,000 more on our Line of Credit during the six months ended June 30, 2020 when compared to the same period in 2019.

•An increase in comparative cash flows of $4,624 related to the repurchase on common shares. During the six months ended June 30, 2019, we repurchased $4,624 in common shares. We had no such repurchases during 2020.

•An increase in comparative cash flows of $18,387 related to dividends paid. During the six months ended June 30, 2020 we paid $18,051 in dividends compared to $36,438 for the comparative period in 2019.

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.

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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 December 2018 Financial Standards White Paper 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 depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. 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.

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, 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.

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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):

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net loss applicable to common shareholders	$	(69,608)	$	(443)	$	(98,727)	$	(13,146)
Loss allocated to noncontrolling interest	(8,216)		(41)		(11,113)		(1,264)
Loss (income) from unconsolidated joint ventures	502		(299)		1,520		(480)
Loss from impairment of depreciable assets	1,069		—		1,069		—
Depreciation and amortization	24,322		23,964		48,510		48,092
Funds from consolidated hotel operations applicable to common shareholders and Partnership Units	(51,931)		23,181		(58,741)		33,202
(Loss) income from unconsolidated joint ventures	(502)		299		(1,520)		480
Unrecognized pro rata interest in loss (1)	(512)		(35)		(361)		(3,008)
Depreciation and amortization of difference between purchase price and historical cost (2)	21		23		42		47
Interest in depreciation and amortization of unconsolidated joint ventures (3)	393		1,292		795		2,574
Funds from unconsolidated joint ventures operations applicable to common shareholders and Partnership Units	(600)		1,579		(1,044)		93
Funds from Operations applicable to common shareholders and Partnership Units	$	(52,531)	$	24,760	$	(59,785)	$	33,295
Weighted Average Common Shares and Common Units
Basic	38,609,922		39,127,385		38,587,011		39,121,421
Diluted	43,286,310		43,443,916		43,426,465		43,396,004

(1) For U.S. GAAP reporting purposes, our interest in the joint venture's loss is not recognized since our U.S. GAAP basis in the joint venture has been reduced to $0. Our interest in FFO from the joint venture equals our percentage ownership in the venture's FFO including loss we have not recognized for U.S. GAAP reporting.

(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.

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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. Additionally, our management companies will face challenges to raise room rates to reflect the impact of inflation until there is a substantial economic recovery from the COVID-19 pandemic.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The estimates and assumptions made by management in applying critical accounting policies have not changed materially during 2020 and 2019 and none of the estimates or assumptions have proven to be materially incorrect or resulted in our recording any significant adjustments relating to prior periods. See Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 for a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements.

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.

Identifiable assets, liabilities, and noncontrolling interests 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.

Properties intended to be sold are designated as “held for sale” on the balance sheet. In accordance with ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations, we evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.

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.

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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 June 30, 2020, based on our analysis and given consideration to the impairment charge taken on one of our hotels held for sale, we have determined that the estimated future cash flow of each of the properties in our portfolio was sufficient to recover its carrying value.

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. As a result of identified structural risks of interbank offered rates, in particular, the London Interbank Offered Rate (LIBOR), reference rate reform is underway to identify alternative reference rates that are more observable or transaction based. The update provides guidance in accounting for changes in contracts, hedging relationships, and other transactions as a result of this reference rate reform. The optional expedients and exceptions contained within this update, in general, only apply to contract amendments and modifications entered into prior to January 1, 2023. The provisions of this update that will most likely affect our financial reporting process relate to modifications of contracts with lenders and the related hedging contracts associated with each respective modified borrowing contract. In general, the provisions of the update would benefit the Company by allowing, among other things, the following:

•Allowing modifications of debt contracts with lenders that fall under the guidance of ASC Topic 470 to be accounted for as a non-substantial modification and not be considered a debt extinguishment.

•Allowing a change to contractual terms of a hedging instrument in conjunction with reference rate reform to not require a dedesignation of the hedging relationship.

•Allowing a change to the interest rate used for margining, discounting, or contract price alignment for a derivative that is a cash flow hedge to not be considered a change to the critical terms of the hedge and will not require a dedesignation of the hedging relationship.

We have not entered into any contract modifications yet, as it directly relates to reference rate reform but we anticipate having to undertake such modifications in the future as a majority of our contracts with lenders and hedging counterparties are indexed to LIBOR. While we anticipate the impact of this update may benefit the Company, we are still evaluating the overall impact to the Company.

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Item 3. 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. As of June 30, 2020, we are exposed to interest rate risk with respect to variable rate borrowings under our Line of Credit, certain variable rate mortgages, and notes payable. As of June 30, 2020, we had total variable rate debt outstanding of $199,548 with a weighted average interest rate of 3.04%. The effect of a 100 basis point increase or decrease in the interest rate on our variable rate debt outstanding as of June 30, 2020 would be an increase or decrease in our interest expense for the three and six months ended June 30, 2020 of $490 and $911, respectively.

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 June 30, 2020, we have an interest rate cap related to debt on the Annapolis Waterfront Hotel, MD and we have ten interest rate swaps related to debt on Hilton Garden Inn, 52nd Street, New York, NY; Courtyard, LA Westside, Culver City, CA; Hyatt Union Square, New York, NY; Hilton Garden Inn Tribeca, New York, NY; and our Credit Facility. We do not intend to enter into derivative or interest rate transactions for speculative purposes.

As of June 30, 2020, approximately 85.5% of our outstanding consolidated long-term indebtedness was subject to fixed rates or effectively capped, while 14.5% of our outstanding long term indebtedness is subject to floating rates, including borrowings under our Line of Credit. The majority of our floating rate debt and any corresponding derivative instruments are indexed to various tenors of LIBOR, and we acknowledge that in 2021, the financial institutions that produce the LIBOR indexes are expected to discontinue that practice. We are currently evaluating the impact this will have on our financial results and liquidity and will continue to work with our lenders to find a suitable resolution for our LIBOR-based debt.

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 June 30, 2020 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 June 30, 2020 to be approximately $1,123,707 and a 100 basis point decrease in market interest rates would cause the fair value of our fixed-rate debt outstanding at June 30, 2020 to be approximately $1,177,680.

We regularly review interest rate exposure on our outstanding borrowings in an effort to minimize the risk of interest rate fluctuations. For debt obligations outstanding as of June 30, 2020, the following table presents expected principal repayments and related weighted average interest rates by expected maturity dates:

	Less Than 1 Year			1 - 3 years			4 - 5 Years			After 5 Years			Total
Fixed Rate Debt	$	932		$	505,385		$	437,049		$	37,831		$	981,197
Weighted Average Interest Rate	3.83		%	3.83		%	3.79		%	4.72		%	4.04		%
Floating Rate Debt	$	—		$	26,045		$	26,955		$	51,548		$	104,548
Weighted Average Interest Rate	—			3.04		%	3.09		%	3.16		%	3.03		%
	$	932		$	531,430		$	464,004		$	89,379		$	1,085,745
Line of Credit	$	—		$	95,000		$	—		$	—		$	95,000
Weighted Average Interest Rate	—			2.41		%	—			—			2.41		%
	$	932		$	626,430		$	464,004		$	89,379		$	1,180,745

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Item 4. Controls and Procedures

Based on the most recent evaluation, the Company’s Chief Executive Officer and Chief Financial Officer believe the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of June 30, 2020.

There were no changes to the Company’s internal controls over financial reporting during the three months ended June 30, 2020, that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

The current COVID-19 pandemic had, and will continue to have adverse effects on our financial condition, results of operations, cash flows and performance for an indeterminate period of time. Future pandemics may also have adverse effects on our financial condition, results of operations, cash flows and performance.

The global pandemic caused by the coronavirus known as COVID-19 has had, and is continuing to have, a severe and negative impact on both the U.S. economy and the global economy. Financial markets have experienced significant volatility during the first and second quarters of 2020, which is expected to continue over upcoming quarters. Globally and throughout the United States, federal, state, and local governments have instituted quarantines, domestic and international travel restrictions and advisories, school closings, "shelter in place" orders, social distancing efforts, limits on gathering size and restrictions on types of businesses that may continue operations. These restrictions have had, and continue to have, a severe impact on the U.S. lodging industry and many of our hotels have suspended operations while others continue to operate at a significantly reduced occupancy.

The following factors should be considered because the COVID-19 pandemic has significantly adversely affected, and continues to affect, the ability of our hotel managers to successfully operate our hotels and has had, and continues to have, a significant adverse effect on our financial condition, results of operations and cash flows due to, among other factors:

•a complete suspension or significant reduction of operations at many of our properties;

•a variety of factors related to the coronavirus have caused, and continue to cause, a sharp decline in group, business and leisure travel, including but not limited to (i) restrictions on travel mandated by governmental entities or voluntarily imposed by employers, (ii) the postponement or cancellation of conventions and conferences, music and arts festivals, sporting events and other large public gatherings, (iii) the closure of amusement parks, museums and other tourist attractions, (iv) the closure of colleges and universities, and (v) negative public perceptions of travel and public gatherings in light of the perceived risks associated with COVID-19;

•travelers have been, and continue to be, wary to travel where, or because, they may view the risk of contagion as increased and contagion or virus-related deaths linked or alleged to be linked to travel to our properties, whether accurate or not, may injure our reputation;

•travelers may be dissuaded from traveling due to possible enhanced COVID-19-related screening measures which are being implemented across multiple markets we serve;

•travelers may be dissuaded from traveling due to the concern that additional travel restrictions implemented between their departure and return may affect their ability to return to their homes;

•commercial airline service has been reduced or suspended to many of the areas in which our hotels are located, if scheduled airline service does not increase or return to normal levels once our hotels and resorts are re-opened it could negatively affect our revenues;

•the reduced economic activity could also result in an economic recession, and increased unemployment, which could negatively impact future ability or desire to travel lodging demand and, therefore, our revenues, even after the temporary restrictions are lifted;

•a decrease in the ancillary revenue from amenities at our properties;

•the financial impact of the COVID-19 pandemic could negatively impact our future compliance with the financial covenants of our Credit Facility after these covenants again become applicable in 2021 or our compliance with covenants in other debt obligations, and result in a default and potentially an acceleration of indebtedness which would adversely affect our financial condition and liquidity;

•difficulty in accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital;

•the general decline in business activity and demand for real estate transactions adversely affecting our ability to acquire additional properties;

•the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during and after this disruption;

•we may be subject to increased risks related to employee matters, including increased employment litigation and claims for severance or other benefits tied to termination or furloughs as a result of hotel closures or reduced operations prompted by the effects of the pandemic;

•employee or guest assertions that our properties were not adequately cleaned or that adequate safeguards were not in place to prevent contact with employees or guests may result in liabilities; and

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•the reduction in our cash flows has caused the indefinite suspension of dividends and could impact our ability to pay dividends to our stockholders at expected levels in the future.

The rapid development and fluidity of the COVID-19 pandemic makes it extremely difficult to assess its full adverse economic impact, and future impact, on our financial condition, results of operations, cash flows and performance. In addition, an outbreak of another disease or similar public health threat, or fear of such an event, that affects travel demand, travel behavior or travel restrictions could have a material adverse impact on the Company's business, financial condition and operating results. Outbreaks of other diseases could also result in increased government restrictions and regulation, such as those actions described above or otherwise, which could adversely affect our operations.

The potential effects of COVID-19 also could intensify or otherwise affect many of our other risk factors that are

included in Part 1-Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the "Annual Report"), including, but not limited to, those factors listed under “Risks Related to the Economy and Credit Markets” and “Risks Related to the Hotel Industry” and in our subsequent Quarterly Reports on Form 10-Q. Because the COVID-19 situation is unprecedented and continuously evolving, the other potential impacts to our risk factors that are further described in our Annual Report and in our subsequent Quarterly Reports on Form 10-Q are uncertain.

We may be unsuccessful in obtaining a waiver or amendment to our Credit Agreement, specifically with respect to the Credit Facility covenants, prior to certain covenants being measured for the period ending June 30, 2021. The failure to obtain such a waiver or amendment, or otherwise repay the debt, probably will lead to an event of default, which would have a material adverse effect on our financial condition, which gives rise to substantial doubt about our ability to continue as a going concern.

The covenant waivers on our Credit Facility extend through March 31, 2021. Absent additional amendments to our Credit Agreement, however, we believe that it is probable we will breach certain of our Credit Facility covenants when measured for the period ended June 30, 2021. This potential event of default could lead to potential acceleration of amounts due under the Credit Facility. Notwithstanding our belief that we probably will be successful in renegotiating the terms of our Credit Facility prior to an event of default, we believe that we will continue to have access to the capital markets. Also, we could choose to raise cash by selling hotel properties, although there can be no assurances we would be successful on terms favorable to us.

Management’s primary mitigation plan to avoid a default under its Credit Agreement is to obtain a further waiver from its creditors or amend the Credit Facility in a manner to avoid an event of default. There can be no assurances that we will be able to obtain a waiver or amendment in a timely manner, or on acceptable terms, if at all. The failure to obtain a waiver or amendment, or otherwise repay the debt, could lead to an event of default, which would have a material adverse effect on our financial condition, which gives rise to substantial doubt about our ability to continue as a going concern.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

As a result of the turmoil in the financial markets resulting from the spread of the novel coronavirus and the global COVID-19 pandemic, on March 19, 2020, in order to preserve liquidity, we revoked our previously announced first quarter 2020 quarterly cash dividends on our common shares, 6.875% Series C Cumulative Redeemable Preferred Shares, 6.50% Series D Cumulative Redeemable Preferred Shares and 6.50% Series E Cumulative Redeemable Preferred Shares. The payment by us of dividends, with limited exceptions, has been prohibited under the terms of the amendments to the Credit Agreements entered into on April 2, 2020. Unpaid dividends on our Series B and Series C Preferred Stock accumulate without interest. Unpaid dividends on our preferred shares shall accrue without interest. No cash dividends may be paid on our common shares unless all accrued but unpaid dividends on our preferred shares have been (or contemporaneously are) declared and paid, or declared and a sum sufficient for such payment has been set apart for payment for all past dividend periods. As of the date of this report, the total arrearage of unpaid cash dividends due on each of our 6.875% Series C Cumulative Redeemable Preferred Shares, 6.50% Series D Cumulative Redeemable Preferred Shares and 6.50% Series E Cumulative Redeemable Preferred Shares is $2,578,200, $6,257,632 and $3,251,230, respectively.

Item 4. Mine Safety Disclosures.

Not Applicable.

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Item 5. Other Information.

Third Amended and Restated Employment Agreements

On August 3, 2020, the Company entered into amended and restated employment agreements (each, an “employment agreement,” and collectively, the “employment agreements”) with Hasu P. Shah (Chairman), Jay H. Shah (Chief Executive Officer), Neil H. Shah (President and Chief Operating Officer), Ashish R. Parikh (Chief Financial Officer) and Michael R. Gillespie (Chief Accounting Officer) (each, an “Applicable Employee,” and collectively, the “Applicable Employees”) replacing the prior agreements with each Applicable Employee. The form of employment agreement is filed as an exhibit to this report on Form 10-Q and the following summary is qualified in its entirety by the terms set forth therein. Each employment agreement is for an initial term through December 31, 2022, and thereafter will renew for successive one year periods unless terminated by the Company.

Each employment agreement provides for the payment of a minimum annual base salary to an Applicable Employee, subject to any increase approved by the Board of Trustees. In addition, each Applicable Employee is eligible to receive other incentive compensation, including but not limited to, grants of stock options or common shares. Each of the employment agreements also contains certain confidentiality, non-competition and non-recruitment provisions.

Each of the employment agreements provides for cash payments and the provision of other benefits to the Applicable Employee upon the occurrence of certain triggers. These triggers include the Applicable Employee’s voluntary termination, the Applicable Employee’s termination without cause (other than a termination without cause during the 12-month period following a change of control), the Applicable Employee’s termination with cause, the Applicable Employee’s death or disability and the Applicable Employee’s termination without cause or resignation for good reason within 12 months of a change of control. Certain compensation calculations are described below. All capitalized terms not defined herein shall have the meanings ascribed to them in the respective employment agreement.

With respect to a Termination without Cause (other than a Termination without Cause during the 12-month period following a Change of Control), for each of the Applicable Employees, the termination without cause calculation includes the following:

•all Base Salary payable and expenses reimbursable to the Executive by the Company, each through the date of the termination;

•12 months of Base Salary;

•the maximum annual bonus under the Company’s STIP that the employee could earn for the year that includes the date of termination;

•full accelerated vesting of the employee’s time-based and performance-based outstanding and unvested awards (including outstanding LTIP Awards) granted under the Equity Plan, and with respect to any such awards containing performance periods that have not yet concluded, then such awards shall fully vest as though the performance conditions were achieved at target level; and

•immediate redemption by the Company of the LTIP Awards of each employee at their then fair market value.

With respect to a Termination without Cause during the 12-month period following a Change of Control, for each of the Applicable Employees the calculation includes the same compensation elements as Termination without Cause with the base salary and maximum annual bonus elements subject to a multiple for each of the Applicable Employees. The multiple for each applicable employee are as follows: Hasu P. Shah - 2.00x, Jay H. Shah - 2.99x, Neil H. Shah - 2.99x, Ashish R. Parikh - 2.00x, and Michael R. Gillespie - 1.00x.

2020 Executive Compensation Program

Our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan, as amended, (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. The Short Term Incentive Program ("STIP") and the Long-Term Incentive Program ("LTIP") are incentive compensation programs that align executive compensation with the performance of the Company.

2020 Short Term Incentive Program

On August 3, 2020, the Compensation Committee of our Board of Trustees (the “Compensation Committee”) approved the 2020 STIP, pursuant to which the executive officers are eligible to earn cash and equity awards based on achieving a threshold, target or maximum level of defined performance objectives for the performance period ending on December 31, 2020. The 2020 STIP objectives include the following metrics (1) liquidity generation, (2) balance sheet flexibility, (3) expense reduction measures and (4) exploration of long term strategic objectives. Amounts earned under the STIP are awarded 50% in cash and 50% in equity awards, provided that the Compensation Committee has a policy that allows

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the executive officers to elect to receive LTIP Units in lieu of cash payment for amounts earned under the 2020 STIP. All of our executive officers elected to receive the incentive from the 2020 STIP in LTIP Units. For payments elected in LTIP Units in lieu of cash payments, the executive officers receive a 25% premium. Equity issued under the 2020 STIP vests on the two year anniversary from the end of the performance period

Based on the unique circumstances of the COVID-19 pandemic and the timing of the adoption of the 2020 STIP, the 2020 STIP incentive ranges offer the executive officers the opportunity to earn 50% of the 2019 STIP opportunity at the target level. The table below details the amounts the executive officers may earn for threshold, target and maximum performance under the 2020 STIP as a percentage of base salary, prior to any voluntary base salary reductions taken by the executive officers:

	2020 STIP Ranges
	Threshold	Target	Maximum
Chairman	60%	70%	80%
CEO	120%	150%	190%
COO	120%	150%	190%
CFO	80%	120%	150%
CAO	80%	90%	110%

2020 Long Term Incentive Program

On August 3, 2020, the Compensation Committee approved the 2020 LTIP pursuant to which the executive officers are eligible to earn equity awards based on achieving a threshold, target or maximum level of defined market and performance objectives during the three-year performance period which commenced on January 1, 2020 and ends December 31, 2022. The shares or LTIP Units issuable under the 2020 LTIP are based on the Company’s achievement of a certain level of (1) absolute total shareholder return (37.5% of the award), (2) relative total shareholder return as compared to the Company’s peer group (37.5% of the award), and (3) relative growth in revenue per available room (RevPar) compared to the Company’s peer group (25.0% of the award).

The 2020 LTIP incentive ranges are consistent with the 2019 LTIP and the table below details those ranges under the 2020 LTIP as a percentage of base salary prior to any voluntary base salary reductions taken by the executive officers:

	2020 LTIP Ranges
	Threshold	Target	Maximum
Chairman	115%	140%	170%
CEO	160%	185%	210%
COO	160%	185%	210%
CFO	110%	130%	150%
CAO	35%	60%	75%

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Item 6. Exhibits.

Exhibit No.
10.1	Form of Third Amended and Restated Employment Agreement, dated August 3, 2020.*+
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	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*	Filed herewith
+	Compensatory plan or arrangement

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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
August 6, 2020	/s/ Ashish R. Parikh
	Ashish R. Parikh
	Chief Financial Officer (Principal Financial Officer)

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EX-10.1

Execution Version

THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Third Amended and Restated Employment Agreement (this "Agreement"), is entered into by and between HERSHA HOSPITALITY TRUST, a Maryland real estate investment trust (the "Company"), and ____________________ (the "Executive"), effective as of ____________________, 2020, and is as follows:

WITNESSETH:

WHEREAS, the Company and the Executive entered into that certain Second Amended and Restated Employment Agreement effective as of April 18, 2012 (the "Prior Agreement"); and

WHEREAS, the Company and the Executive desire to amend the Prior Agreement in certain respects and restate the terms and conditions of the Prior Agreement as set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual obligations hereinafter set forth, the parties agree as follows:

1. Employment.The Company shall employ the Executive, and the Executive agrees to be so employed, as the Chief Executive Officer of the Company on the terms set forth herein.

2. Term.The initial term of the Executive’s employment hereunder shall commence on ____________________, 2020, and shall continue through December 31, 2022, unless this Agreement (and the Executive's employment hereunder) is otherwise terminated as set forth in this Agreement. Thereafter, this Agreement shall automatically renew for subsequent periods of one year, unless the Company provides written notice to the Executive at least 180 days prior to the end of the initial term, or 180 days prior to the end of any renewal term, that this Agreement is not to be renewed and that the Executive's employment is being terminated pursuant to the terms of this Agreement. For purposes of this Agreement the initial term and any renewal term shall be defined as the "Term." Notwithstanding the foregoing, termination of this Agreement and any termination of the Executive’s employment hereunder shall be subject to the provisions of Sections 9, 10 and 11 of this Agreement.

3. Services.The Executive shall devote such amount of his time and attention to the Company’s affairs as are necessary to perform his duties to the Company as determined by the Company’s Board of Trustees (the "Board"). The Executive shall have authority and responsibility with respect to the day-to-day operations and management of the Company and Hersha Hospitality Limited Partnership (the "Partnership"), for which the Company currently serves as sole general partner, and the Company’s other subsidiaries (collectively "Affiliates"), as well as implementation of the long range growth strategy of the Company and Affiliates consistent with direction from the Board.

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4. Compensation.

(a) During the Term, the Company shall pay the Executive for his services an initial annual base salary of ____________________ ($_______.00), to be paid in accordance with the Company’s regular payroll procedures, subject to any increases approved by the Board. For purposes of this Agreement, the term "Base Salary" shall be the annual base salary paid to the Executive at the time in question for his services rendered under this Agreement, provided, however, that for purposes of the calculations set forth in Section 10 and 11 of this Agreement, and irrespective of any agreement by the Executive to the contrary, such amount shall never be less than the dollar amounts set forth in the first sentence of this Section 4(a).

(b) In addition to the Base Salary, the Executive may be entitled to receive other incentive compensation, including but not limited to, grants of stock options or shares of stock of the Company, which awards shall be made (if at all) in consideration of and as an incentive for services performed solely for the Company, in accordance with rules and criteria established by the Compensation Committee and approved by the Board.

5. [Intentionally Left Blank]

6. Expenses.The Company recognizes that the Executive will have to incur certain out-of-pocket expenses, including but not limited to travel expenses, related to his services and the Company’s business and the Company agrees to reimburse the Executive for all reasonable expenses necessarily incurred by him in the performance of his duties upon presentation of a voucher or documentation indicating the amount and business purposes of any such expenses and in accordance with applicable rules of the Internal Revenue Service. The documentation and expense reimbursement payment must be completed no later than March 15 of the calendar year following the calendar year in which the Executive incurred the expense.

7. [Intentionally Left Blank]

8. Definitions.For purposes of this Agreement, the following terms shall have the following definitions:

(a) "Voluntary Termination" means, subject to the provisions of Section 11 hereof, the Executive’s voluntary termination of his employment hereunder, which may be effected by the Executive giving the Board not less than one hundred twenty (120) days’ prior written notice of the Executive’s desire to terminate his employment as of a specified date or the Executive’s failure to provide the services described in Section 3 hereof for a period greater than four consecutive weeks by reason of the Executive’s voluntary refusal to perform such services as determined by the Board. Notwithstanding the foregoing, if the Executive gives notice of Voluntary Termination and, prior to the expiration of the one hundred twenty notice period, the Executive voluntarily refuses or fails to provide the services described in Section 3 hereof for a period greater than two consecutive weeks, the Company may, in its discretion, accelerate the Voluntary Termination effective the date on which the Executive so ceases to carry out his duties as determined by the Board. For purposes of this Section 8, voluntary refusal to perform services shall not include taking vacation otherwise permitted, the Executive’s failure to perform services

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on account of his illness or the illness of a member of his immediate family (provided such illness is adequately substantiated at the reasonable request of the Company), or any other absence from service with the written consent of the Board. A Voluntary Termination shall not include the Executive’s resignation with Good Reason following a Change of Control (as defined below).

(b) "Termination Without Cause" means the termination of the Executive’s employment by the Company for any reason other than a Voluntary Termination or Termination With Cause.

(c) "Termination With Cause" means the termination of the Executive’s employment by act of the Board for any of the following reasons:

(i) the Executive’s conviction of a felony;

(ii) the Executive’s theft, embezzlement, misappropriation of or intentional and malicious infliction of damage to the Company’s (or its subsidiaries’) property or business opportunity;

(iii) the Executive’s breach of the covenants in Section 12 hereof;

(iv) the Executive’s neglect of his duties or responsibilities hereunder or his failure or refusal to follow any written direction of the Board or any duly constituted committee thereof, which failure continues for a period of twenty (20) calendar days after the Company provides Employee written notice (other than as a result of the Executive’s physical or mental inability to perform the services described in Section 3 above, which is addressed in Section 10 below); and

(v) the Executive’s abuse of alcohol, drugs or other substances, or his engaging in other deviant personal activities in a manner that, in the reasonable judgment of the Board, adversely affects the reputation, goodwill or business position of the Company.

9. Voluntary Termination; Termination With Cause.If (i) the Executive shall cease being an employee of the Company on account of a Voluntary Termination or (ii) there shall be a Termination With Cause, the Executive shall not be entitled to any compensation after the effective date of such Voluntary Termination or Termination With Cause (except Base Salary accrued but unpaid on the effective date of such event). In the event of a Voluntary Termination (which shall not include the Executive’s resignation for Good Reason following a Change of Control as defined by Paragraph 11), or Termination With Cause, the Executive shall continue to be subject to the covenants contained in Section 13 hereof.

10. Death or Disability; Termination Without Cause.

(a) Death or Disability. Upon (i) the death of the Executive, or (ii) Disability of the Executive, this Agreement shall terminate and the Company shall continue to pay the Executive or his heirs, devisees, executors, legatees or personal representatives, as appropriate,

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the payments of the Executive’s Base Salary then in effect through the month following the month in which such event occurs plus an amount equal to 4 weeks' accrued but unused vacation. For purposes hereof, a "Disability" means the Executive’s becoming permanently disabled within the meaning of the Company’s long-term disability plan then in effect for, or applicable to, the Executive. If the Company does not provide any such benefit, then at the request of the Company, the Executive shall promptly make himself available for an examination by a physician selected by the Company who is board certified in a practice area selected by the Company, and to follow the recommendation of such physician regarding further examination and testing. The issue to be presented to the physician for determination is whether the Executive suffers from a mental or physical incapacity which materially inhibits or prevents him from carrying out the duties of his full-time employment as described herein, and, if so, whether such condition is more likely than not to exist for a period in excess of one hundred twenty (120) days. The Executive intends for the Company to be treated as the Executive would be with respect to his rights regarding the use and disclosure of his individually identifiable health information or other medical records. This release authority applies to any information governed by the Health Insurance Portability and Accountability Act of 1996 (a/k/a HIPAA), 42 USC 1320d and 45 CFR 160-164 and authorizes: any physician, health-care professional, dentist, health plan, hospital, clinic, laboratory, pharmacy or other covered health-care provider, any insurance company and the Medical Information Bureau Inc. or other health-care clearinghouse that has provided treatment or services to him, or that has paid for or is seeking payment from him for such services, to give, disclose and release to the Company, without restriction, all of his individually identifiable health information and medical records regarding any past, present or future medical or mental health condition, including all information relating to the diagnosis and treatment of HIV/AIDS, sexually transmitted diseases, mental illness, and drug or alcohol abuse.

(b) Termination Without Cause. Upon a Termination Without Cause, the non-recruitment restrictions contained in Section 13(a)(iii) shall apply, except that such restrictions shall not apply in the context of a Termination Without Cause during the 12-month period following a Change of Control (as defined below). In all other respects, upon a Termination Without Cause (other than a Termination Without Cause during the 12 month period following a Change of Control, as defined below, which shall be governed by the provisions of Section 11 below) this Agreement shall terminate and, subject to Section 12 below, the Executive shall be entitled to receive from the Company: (i) all Base Salary payable and expenses reimbursable to the Executive by the Company, each through the date of the termination; (ii) 12 months of Base Salary; (iii) the maximum annual bonus under the Company’s Short-Term Incentive Program (together with any equivalent or successor program pursuant to which equity awards with performance-based vesting conditions greater than one year have been granted (the "STIP")) that the Executive could earn for the year that includes the date of termination, or if no maximum bonus amount has been set, then the greater of (y) the annual bonus paid under the STIP in the preceding year or (z) the maximum bonus that was set under the STIP for the preceding year); (iv) full accelerated vesting of the Executive's time-based and performance-based outstanding and unvested awards (including outstanding LTIP Awards) granted under the Amended and Restated Hersha Hospitality Trust 2012 Equity Incentive Plan, as amended and restated as of April 16, 2019 (the "Equity Plan") (and to the extent such Termination Without Cause occurs on or prior to March 31^st of such calendar year, then the grant

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of the equity award under the Equity Plan that would have otherwise been granted to the Executive on or around such March 31^st shall be accelerated and granted to the Executive prior to such Termination Without Cause, with such award being subject to the foregoing full acceleration of vesting set forth in this Section 10(b)(iv)), and with respect to any such awards containing performance periods that have not yet concluded, then such awards shall fully vest as though the performance conditions were achieved at target level; and (v) LTIP Awards shall be immediately redeemed by the Partnership at their then fair market value in accordance with Section 8.05 of the Partnership Agreement (treating each LTIP Unit as an OP Unit for purposes of determining the redemption proceeds) and with such redemption proceeds paid by the Partnership to the Executive. The maximum annual bonus determined under the STIP or equivalent program for purposes of (iii) above shall not be less than the maximum annual bonus under the 2019 STIP. The foregoing actions in (i) through (v) shall occur within ten (10) days after the Executive's Termination Without Cause and all such payments shall be paid to the Executive in the form of a lump sum within such ten (10) day time period. In addition, the Company shall cause the Executive’s insurance benefits, as in effect immediately prior to the termination, to remain in effect for twelve (12) months following the date of termination upon the same terms, and at the same cost to the Executive, as in effect immediately prior to termination.

11. Change of Control Compensation.

(a) Compensation. Conditioned upon the Executive's compliance with the covenants contained in Section 13 of this Agreement, in the event of a Termination Without Cause or the Executive’s resignation for Good Reason (as defined below) in either case within 12 months following a Change of Control (as defined below), then the Executive shall be entitled to receive: (i) any Base Salary and expenses reimbursable to the Executive by the Company, each through the date of the termination; (ii) a benefit (the "Change of Control Bonus") equal to [VALUE] and [VALUE]/100 ([TOTAL VALUE]]) times the sum of (x) 12 months of the Executive’s Base Salary; and (y) the maximum annual bonus under the STIP that the Executive could earn for the year that includes the date of termination, or if no maximum bonus amount has been set, then the greater of (A) the annual bonus paid under the STIP in the preceding year or (B) the maximum bonus that was set under the STIP for the preceding year); (iii) full accelerated vesting of the Executive's time-based and performance-based outstanding and unvested awards (including outstanding LTIP Awards) granted under the Equity Plan (and to the extent such Change in Control occurs on or prior to March 31^st of such calendar year, then the grant of the equity award under the Equity Plan that would have otherwise been granted to the Executive on or around such March 31^st shall be accelerated and granted to the Executive prior to such Change in Control, with such award being subject to the foregoing full acceleration of vesting set forth in this Section 11(a)(iii)), and with respect to any such awards containing performance periods that have not yet concluded as of a Change of Control, then such awards shall fully vest as though the performance conditions were achieved at target level; and (iv) LTIP Awards shall be immediately redeemed by the Partnership at their then fair market value in accordance with Section 8.05 of the Partnership Agreement (treating each LTIP Unit as an OP Unit for purposes of determining the redemption proceeds) and with such redemption proceeds paid by the Partnership to the Executive. The maximum annual bonus determined under the STIP or

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equivalent program for purposes of (ii)(y) above shall not be less than the maximum annual bonus under the 2019 STIP. The foregoing actions in (i) through (iv) shall occur within ten (10) days after the Executive's Termination Without Cause and all such payments shall be paid to the Executive in the form of a lump sum within such ten (10) day time period. In addition, the Company shall cause the Executive’s insurance benefits, as in effect immediately prior to the termination, to remain in effect for eighteen (18) months following the date of termination upon the same terms, and at the same cost to the Executive, as in effect immediately prior to termination.

(b) Definition of a Change of Control. For purposes of this Agreement a "Change of Control" shall be deemed to have occurred if, at any time during the Term, any of the following events occurs:

(i) any "person", as that term is used in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes, is discovered to be, or files a report on Schedule 13D or 14D-1 (or any successor schedule, form or report) disclosing that such person is, a beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any successor rule or regulation), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of trustees;

(ii) a change in the membership of the Board during any twenty-four month period such that individuals who, as of the election to the Board, without the recommendation or approval of the incumbent Board, constitute a majority of the numbers of trustees of the Company then in office;

(iii) the Company is merged, consolidated or reorganized into or with another corporation or other legal person, or securities of the Company are exchanged for securities of another corporation or other legal person, and immediately after such merger, consolidation, reorganization or exchange less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of trustees of the Company immediately prior to such transaction;

(iv) the Company in any transaction or series of related transactions, sells all or substantially all of its assets to any other corporation or other legal person and less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or sales are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of trustees of the Company immediately prior to such sale;

(v) the Company and its affiliates shall sell or transfer of (in a single transaction or series of related transactions) to a non-affiliate business operations or assets that generated at least two-thirds of the consolidated revenues (determined on the basis of the Company’s four most recently completed fiscal quarters for which reports have been filed under the Exchange Act) of the Company and its subsidiaries immediately prior thereto;

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(vi) the Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K (or any successor, form or report or item therein) that a change of control of the Company has occurred; or

(vii) any other transaction or series of related transactions occur that have substantially the effect of the transactions specified in any of the preceding clauses in this sentence.

(c) Certain Transactions. Notwithstanding the provisions of Section 11(b)(i) or 11(b)(vi) hereof, unless otherwise determined in a specific case by majority vote of the Board, a Change of Control shall not be deemed to have occurred for purposes of this Agreement solely because (i) the Company, (ii) with respect to Section 11(b)(i), an entity in which the Company directly or indirectly beneficially owns 50% or more of the voting securities or (iii) any Company-sponsored employee stock ownership plan, or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item thereon) under the Exchange Act, disclosing beneficial ownership by it of shares of stock of the Company, or because the Company reports that a Change of Control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership.

(d) Definition of Good Reason. For purposes of this Agreement, "Good Reason" shall be deemed to mean any of the following:

(i) a change in the Executive’s position, discretion or responsibilities (including reporting responsibilities) which materially diminishes the Executive’s position, discretion or responsibilities as in effect immediately prior to a Change of Control; the assignment to the Executive of any duties or responsibilities which are materially inconsistent with such position, discretion or responsibilities; or any removal of the Executive from or failure to reappoint or reelect the Executive to any of such positions, except in connection with a Termination with Cause as defined in Section 8(c) as a result of the Executive’s death or Disability, or by Voluntary Termination;

(ii) a reduction in the Executive’s Base Salary bonus arrangement as in effect on the date hereof or as the same may be increased from time to time;

(iii) the Company’s requiring the Executive to be based at any place other than a location within a thirty-mile radius of his location immediately prior to Change of Control, except for reasonably required travel on the Company’s business which is not materially greater than such travel requirements prior to the Change of Control;

(iv) the failure by the Company to continue to provide the Executive with compensation and benefits provided for under this agreement or benefits substantially similar to those provided to the Executive under any of the employee benefit plans in which the Executive is or becomes a participant, or the taking of any action by the Company which would

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directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change of Control;

(v) any material breach by the Company of any provision of this Agreement; or

(vi) the failure of the Company to obtain a satisfactory agreement from any successor or assign of the Company to assume and agree to perform this Agreement.

Except in connection with a Change of Control, the Executive’s resignation shall be for Good Reason only if the Executive gives the Company written notice of the ground(s) asserted as Good Reason within 90 days after the Executive first becomes aware of the condition giving rise to the existence of Good Reason, the Company fails to remedy or cure such conditions within 30 days after its receipt of the Executive’s notice and the Executive resigns within 90 days after the end of the cure period. For purposes of clarity and avoidance of doubt, the Executive is not required to provide written notice to the Company in order for him to effectuate a resignation for Good Reason on (or within the 12-month period immediately following) a Change of Control.

(e) Limitation on Benefits.

(i) The benefits that the Executive may be entitled to receive under this Agreement and other benefits that the Executive is entitled to receive under other plans, agreements and arrangements (which, together with the benefits provided under this Agreement, are referred to as "Payments"), may constitute Parachute Payments that are subject to Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the "Code"). As provided in this Section 11(e), the Parachute Payments will be reduced if, and only to the extent that, a reduction will allow the Executive to receive a greater Net After Tax Amount than the Executive would receive absent a reduction.

(ii) The Company will first determine the amount of any Parachute Payments that are payable to the Executive. The Company also will determine the Net After Tax Amount attributable to the Executive’s total Parachute Payments.

(iii) The Company will next determine the largest amount of Payments that may be made to the Executive without subjecting the Executive to tax under Code Section 4999 (the "Capped Payments"). Thereafter, the Company will determine the Net After Tax Amount attributable to the Capped Payments.

(iv) The Executive will receive the total Parachute Payments or the Capped Payments, whichever provides the Executive with the higher Net After Tax Amount. If the Executive will receive the Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount of any Payments that are not "deferred compensation" under Code Section 409A (first reducing any such noncash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive) and then by reducing the amount of any such cash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive) and

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thereafter by reducing Payments that are "deferred compensation" under Code Section 409A (any such noncash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive). The Company will notify the Executive if it determines that the Parachute Payments must be reduced to the Capped Payments and will send the Executive a copy of its detailed calculations supporting that determination.

(v) As a result of the uncertainty in the application of Code Sections 280G and 4999 at the time that the Company makes its determinations under this Section 11(e), it is possible that amounts will have been paid or distributed to the Executive that should not have been paid or distributed under this Section 11(e), ("Overpayments"), or that additional amounts should be paid or distributed to the Executive under this Section 11(e), ("Underpayments"). If the Company determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive, which assertion the Company believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, that Overpayment will be treated for all purposes as a loan ab initio that the Executive must repay to the Company together with interest at the applicable Federal rate under Code Section 7872; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999. If the Company determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Company will notify the Executive of that determination and the amount of that Underpayment will be paid to the Executive promptly by the Company.

(vi) In making any of the calculations or determinations contemplated by this Section 11(e), the Company shall, unless the Company and the Executive mutually agree otherwise, rely on the advice of its tax counsel at Hunton Andrews Kurth LLP to perform the calculations contemplated by Section 280G of the Code, which calculations shall include the value of reasonable compensation for services (either active post-Change of Control services or services pursuant to a non-compete) to be rendered by the Executive after the Change of Control, and the Company shall accept the opinion of such tax counsel. For purposes of this Section 11(e), the term "Net After Tax Amount" means the amount of any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Code Sections 61, 3101(b) and 4999 and any State or local income taxes applicable to the Executive on the date of payment. The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable, in effect on the date of payment. For purposes of this Section 11(e), the term "Parachute Payment" means a payment that is described in Code Section 280G(b)(2), determined in accordance with Code Section 280G and the regulations promulgated or proposed thereunder.

12. Section 409A. The Company and the Executive intend that the benefits and payments provided under this Agreement shall be exempt from the requirements of Section 409A of the Code ("Section 409A"). Notwithstanding that intent, if the Company determines that any

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benefit or payment under this Agreement is, or may reasonably be expected to be, subject to Section 409A, then such benefit shall be provided and such payment shall be made in a manner that complies with Section 409A and the regulations and other guidance issued pursuant to Section 409A. By way of example, if the Company determines that the Change of Control Bonus is subject to Section 409A and that the Executive is a "specified employee" (as defined for purposes of Section 409A), then the payment of the Change of Control Bonus shall be postponed until the first day of the seventh month beginning after the Executive’s termination. If any cash payment under this Agreement is postponed on account of the application of Section 409A, then such payment shall accrue interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code from the date that the payment is due under this Agreement (but for the requirements of Section 409A) until the date of payment.

13. Protection of Confidential Information; Noncompetition; Non-Recruitment.

(a) Covenant. The Executive acknowledges that his employment by the Company, will, throughout the Term, bring him into close contact with many confidential affairs of the Company, including, without limitation, information about ownership of the company, customer lists, costs, profits, markets, sales, key personnel, pricing policies, and other business affairs and methods and other information not readily available to the public, and plans for future development. The Executive further acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. In recognition of the foregoing, the Executive covenants and agrees:

(i) the Executive shall use all reasonable efforts to protect the confidential matters of the Company and shall keep secret all such confidential matters, including without limitation, the terms and provisions of this Agreement, and shall not intentionally disclose such matters to anyone outside of the Company except as required in the performance of his duties under this Agreement, either during or after the Term, except with the Company’s written consent, provided that: (1) the Executive shall have no such obligation to the extent such matters are or become publicly known other than as a result of the Executive’s breach of his obligations hereunder; (2) the Executive may, after giving prompt written notice to the Company to the extent practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory proceedings; and (3) the Executive may disclose the terms and provisions of this Agreement to his spouse and legal tax and financial advisors, provided however, they agree in writing to be bound by the confidentiality provisions hereof;

(ii) The Executive shall deliver promptly to the Company on termination of his employment by the Company, or at any other time the Company may so request, at the Company’s expense, all memoranda, notes, records, reports and other documents, and all copies thereof relating to the Company’s business, which the Executive obtained while employed, or otherwise serving or acting on behalf of, the Company and which he may then possess or have under his control other than publicly available documents or documents related to the terms and conditions of the Executive employment;

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(iii) Non-Recruitment. Independent of the foregoing provisions, the Executive agrees that, during the term of the Executive’s employment by the Company and for a period of twelve (12) months thereafter, the Executive shall not, without the prior written consent of the Company: (1) directly or indirectly, cause any person engaged or employed by the Company or any of its subsidiaries, (whether part-time or full-time and whether as an officer, employee, consultant, agent, adviser or independent contractor) to voluntarily leave the employ of or engagement with, the Company or any of its subsidiaries or to cease providing services to or on behalf of the Company or any of its subsidiaries, or (2) in any manner seek to engage or employ any such person (whether or not for compensation) as an officer, employee, consultant, agent, adviser or independent contractor for any person other than the Company or any of its subsidiaries (other than legal or accounting advisors).

(b) Noncompete. The Executive expressly covenants and agrees that he will not directly or indirectly, without the prior written consent of the Board, at any time while employed by the Company and for a period of twelve (12) months (plus the length of time that the Executive is in violation of this provision) following the date of that the Executive’s employment terminates, enter into or engage generally in direct or indirect competition with the Company either as an individual on his own or as a partner or joint venture, or as a director, officer, shareholder, employee or agent for any person nor render any services to any person or entity that competes with the Company or any Affiliate. For the purposes of this Section, the Executive or any person or entity shall be deemed to "compete" with the Company or any Affiliate if the Executive personally engages, owns or provides services to any entity engaged in the ownership or management of hospitality units located in the United States including but not limited to Apple Hospitality REIT, Inc., Ashford Hospitality Trust, Inc., Chatham Lodging Trust, DiamondRock Hospitality, Pebblebrook Hotel Trust, RLJ Lodging Trust, Summit Hotel Properties, Inc., Sunstone Hotel Investors, Inc. and Xenia Hotels & Resorts, Inc., and excluding, however, Hersha Hospitality Management, L.P.

(c) Specific Remedy - Injunctive Relief. The parties agree that the restrictions outlined in Sections 13(a) and (b) are reasonable and necessary protections of the immediate interests of the Company and that the Company would not have entered into this Agreement without receiving additional consideration offered by the Executive and binding himself to these restrictions. In addition to such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if the Executive commits a breach of any of the provisions of Section 13(a) or 13(b), the Company shall have the right and remedy to have such provision specifically enforced by any Court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that monetary damages will not provide an adequate remedy to the Company. In the event that, notwithstanding the foregoing, a restriction or any portion thereof, contained in Section 13(a) or 13(b) is deemed to be unreasonable by a court of competent jurisdiction, the Executive and the Company agree that such restriction, or portion thereof, shall be modified in order to make it reasonable and shall be enforceable accordingly.

(d) Consideration. The parties acknowledge the requirement that the currently employed Executive be provided good and valuable consideration for providing the restrictions

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set forth in Section 13(a) and 13(b). Therefore, in consideration of the foregoing restrictions, the Company shall allow the Executive to participate in the Company’s long-term incentive program, the terms of which shall be separately specified and incorporated by reference herein.

14. Notices.All notices or deliveries authorized or required pursuant to this Agreement shall be deemed to have been given when in writing and personally delivered or when deposited in the U.S. mail, certified, return receipt requested, postage prepaid, addressed to the parties at the following addresses or to such other addresses as either may designate in writing to the other party:

If to the Company/the Partnership:

Hersha Hospitality Trust

44 Hersha Drive

Harrisburg, PA 17102

Attn: Board of Directors

With a Copy to:

Hunton Andrews Kurth LLP

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, VA 23219

Attn: Jim Davidson and Anthony Eppert

If to the Executive:

[NAME]

[To his last address on file with the Company]

15. Entire Agreement; Prior Agreement.This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and shall not be modified in any manner except by instrument in writing signed, by or on behalf of the parties hereto; provided, however, that any amendment or termination of the covenant of noncompetition in Section 13 must be approved by a majority of the trustees of the Company other than the Executive, if the Executive is then a trustee of the Company. This Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto. This Agreement supersedes and replaces the Prior Agreement and the Prior Agreement shall have no further force or effect after the execution of this Agreement.

16. Arbitration.

(a) All disputes (except for those arising pursuant to Section 13) arising out of, relating to or concerning this Agreement, the breach of this Agreement, the employment of the Executive, or the termination of the Executive’s employment shall be resolved pursuant to this Section 16. This includes all claims or disputes whether arising in tort or contract and whether arising under statute or common law, including Title VII, the ADA, the ADEA, and all

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other federal and state employment statutes. Any such dispute will be resolved by arbitration held in Harrisburg, Pennsylvania under the Employment Dispute rules of the American Arbitration Association. This agreement to arbitrate will be specifically enforceable.

(b) The Executive and the Company agree that he or it must file any arbitration with the AAA and serve on the other party within sixty (60) days after the date on which the dispute arose.

(c) Subject to Section 16(e) below, each party shall bear its own expenses for arbitration, including attorney and witness fees and expenses, except that the fee of the arbitrator shall be borne solely by the Company.

(d) Upon a request for arbitration under this Agreement, the parties shall confer with each other for the purpose of attempting to select a single independent arbitrator. In the event that the parties cannot agree to the selection of an arbitrator within thirty days of notice of arbitration, three (3) individuals shall serve as arbitrators in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association. One of the arbitrators shall be selected by the Executive and another by the Company. The two arbitrators so selected shall select a third arbitrator. The finding of a majority of the arbitrators shall be final and binding on the parties. The agreement to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction.

(e) The prevailing party in connection with such arbitration shall be entitled to recover from the other party reasonable sums as attorney fees and expenses in connection with such action, except that the fee of the arbitrator shall be borne solely by the Company regardless of outcome.

(f) The arbitrators will have no authority to extend, modify, or suspend any of the terms of this Agreement. The arbitrators will make the award in writing and shall accompany it with an opinion discussing the evidence and setting forth the reasons for the award. The decision of the arbitrators within the scope of the submission will be final and binding on both parties, and any right to judicial action on any matter subject to arbitration hereunder is waived (unless otherwise required by applicable law), except suit to enforce this arbitration award and any rights to vacate or modify the arbitration award in accordance with the Uniform Arbitration Act as enacted in Pennsylvania. The arbitrators shall have authority to award all relief provided for by such relevant laws at issue. If the rules of the AAA differ from those of this Section, the provisions of this Agreement will control.

17. Applicable Law.Except to the extent pre-empted by federal law, this Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to internal conflict of law principles and any litigation or legal action concerning this Agreement, not otherwise waived or subject to arbitration, shall be brought before a state or federal court of competent jurisdiction in Harrisburg, Pennsylvania.

18. Assignment.The Executive acknowledges that his services are unique and personal. Accordingly, the Executive may not assign his rights or delegate his duties or

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obligations under this Agreement. The Company’s rights and obligations under this Agreement shall inure to the benefit of and shall be binding upon the Company’s successors and assigns.

19. Headings.Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

20. Survival. This Agreement shall terminate upon the termination of employment of the Executive; however, the following shall survive the termination of the Executive's employment and/or the expiration or termination of this Agreement, regardless of the reasons for such expiration or termination: Section 8 ("Definitions"), Section 9 ("Voluntary Termination Without Cause"), Section 10 ("Death or Disability; Termination Without Cause"), Section 11 ("Change of Control Compensation"), Section 12 ("Section 409A"), Section 13 ("Protection of Confidential Information; Noncompetition; Non-Recruitment"), Section 14 ("Notices"), Section 15 ("Entire Agreement; Prior Agreement"), Section 16 ("Arbitration") and Section 17 ("Applicable Law").

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the Parties hereto have executed this Third Amended and Restated Employment Agreement as of the date first set forth above.

EXECUTIVE:	HERSHA HOSPITALITY TRUST:
	By:
[NAME]
	Its:
Date:
	Date:

AND ONLY WITH RESPECT TO THE

REDEMPTION OBLIGATIONS SET FORTH

IN SECTIONS 10(b) AND 11(a):

HERSHA HOSPITALITY TRUST, GENERAL PARTNER

TO THE HERSHA HOSPITALITY LIMITED PARTNERSHIP:

By:

Its:

Date:

Signature Page to Third Amended and Restated Employment Agreement

of [NAME]

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jay H. Shah, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2020 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: August 6, 2020
	/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 Quarterly Report on Form 10-Q for the period ended June 30, 2020 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: August 6, 2020
	/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 Quarterly Report on Form 10-Q of Hersha Hospitality Trust (the “Company”) for the period ended June 30, 2020 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.

August 6, 2020	/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 Quarterly Report on Form 10-Q of Hersha Hospitality Trust (the “Company”) for the period ended June 30, 2020 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.

August 6, 2020	/s/ Ashish R. Parikh
	Ashish R. Parikh
	Chief Financial Officer

XML

Cover page - shares	6 Months Ended
	Jun. 30, 2020	Aug. 06, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-14765
Entity Registrant Name	HERSHA HOSPITALITY TRUST
Entity Incorporation, State	MD
Entity Tax Identification Number	25-1811499
Entity Address, Street	44 Hersha Drive
Entity Address, City	Harrisburg
Entity Address, State	PA
Entity Address, Postal Zip Code	17102
City Area Code	717
Local Phone Number	236-4400
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001063344
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A Common Shares
Entity Information [Line Items]
Title of each class	Class A Common Shares of Beneficial Interest, par value $.01 per share
Trading Symbol(s)	HT
Name of each exchange on which registered	NYSE
Entity Common Stock, Shares Outstanding (in shares)		38,789,371
Series C Preferred Shares
Entity Information [Line Items]
Title of each class	6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share
Trading Symbol(s)	HT-PC
Name of each exchange on which registered	NYSE
Series D Preferred Shares
Entity Information [Line Items]
Title of each class	6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share
Trading Symbol(s)	HT-PD
Name of each exchange on which registered	NYSE
Series E Preferred Shares
Entity Information [Line Items]
Title of each class	6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share
Trading Symbol(s)	HT-PE
Name of each exchange on which registered	NYSE
Class B Common Shares
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		0

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation	$ 1,902,464	$ 1,975,973
Investment in Unconsolidated Joint Ventures	7,527	8,446
Cash and Cash Equivalents	23,228	27,012
Escrow Deposits	7,374	9,973
Hotel Accounts Receivable	3,801	9,213
Due from Related Parties	2,363	6,113
Intangible Assets, Net of Accumulated Amortization of $6,705 and $6,545	1,876	2,137
Right of Use Assets	44,761	45,384
Other Assets	20,996	38,177
Hotel Assets Held for Sale	40,170	0
Total Assets	2,054,560	2,122,428
Liabilities and Equity:
Line of Credit	95,000	48,000
Term Loans, Net of Unamortized Deferred Financing Costs (Note 5)	697,597	697,183
Unsecured Notes Payable, Net of Unamortized Deferred Financing Costs (Note 5)	50,763	50,736
Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs	331,771	332,280
Lease Liabilities	54,217	54,548
Accounts Payable, Accrued Expenses and Other Liabilities	74,161	47,626
Dividends and Distributions Payable	0	17,058
Total Liabilities	1,303,509	1,247,431
Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 1)	0	3,196
Shareholders' Equity:
Preferred Shares:  $.01 Par Value, 29,000,000 Shares Authorized, 3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, with Liquidation Preferences of $25.00 Per Share (Note 1)	147	147
Accumulated Other Comprehensive Loss	(27,097)	1,010
Additional Paid-in Capital	1,149,291	1,144,808
Distributions in Excess of Net Income	(427,393)	(338,695)
Total Shareholders' Equity	695,336	807,657
Noncontrolling Interests (Note 1)	55,715	64,144
Equity in noncontrolling interest	751,051	871,801
Total Liabilities and Equity	2,054,560	2,122,428
Class A Common Shares
Shareholders' Equity:
Common Shares	388	387
Class B Common Shares
Shareholders' Equity:
Common Shares	$ 0	$ 0

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Intangible assets, accumulated amortization	$ 6,705	$ 6,545
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 - outstanding (in shares)	14,703,214	14,703,214
Series C, D and E Preferred Shares
Shareholders' Equity:
Preferred shares - liquidation preference value (in dollars per share)	$ 25.00	$ 25.00
Series C Preferred Shares
Shareholders' Equity:
Preferred shares - issued (in shares)	3,000,000	3,000,000
Preferred shares - outstanding (in shares)	3,000,000	3,000,000
Series D Preferred Shares
Shareholders' Equity:
Preferred shares - issued (in shares)	7,701,700	7,701,700
Preferred shares - outstanding (in shares)	7,701,700	7,701,700
Series E Preferred Shares
Shareholders' Equity:
Preferred shares - issued (in shares)	4,001,514	4,001,514
Preferred shares - outstanding (in shares)	4,001,514	4,001,514
Class A Common Shares
Shareholders' Equity:
Preferred shares - outstanding (in shares)	38,789,371	38,652,650
Common shares - par value (in dollars per share)	$ 0.01	$ 0.01
Common shares - authorized (in shares)	104,000,000	104,000,000
Common shares - issued (in shares)	38,789,371	38,652,650
Class B Common Shares
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

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue:
Other Revenues		$ 29	$ (12)	$ 228	$ 138
Total Revenues		17,441	147,501	107,578	262,294
Operating Expenses:
Hotel Ground Rent		1,058	1,114	2,121	2,224
Real Estate and Personal Property Taxes and Property Insurance		9,969	8,997	19,911	18,394
General and Administrative (including Share Based Payments of $1,799 and $3,474, and $4,255 and $5,432 for the three and six months ended June 30, 2020 and 2019, respectively)		4,187	8,100	10,021	13,700
Loss on Impairment of Assets		1,069	0	1,069	0
Depreciation and Amortization		24,322	23,964	48,510	48,092
Total Operating Expenses		58,983	124,785	165,529	240,131
Operating (Loss) Income		(41,542)	22,716	(57,951)	22,163
Interest Income		2	58	38	141
Interest Expense		(13,481)	(13,325)	(26,488)	(26,223)
Other Expense		(385)	(124)	(457)	(83)
Loss on Debt Extinguishment		0	(34)	0	(34)
(Loss) Income Before Results from Unconsolidated Joint Venture Investments and Income Taxes		(55,406)	9,291	(84,858)	(4,036)
(Loss) Income from Unconsolidated Joint Ventures		(502)	299	(1,520)	480
(Loss) Income Before Income Taxes		(55,908)	9,590	(86,378)	(3,556)
Income Tax (Expense) Benefit		(15,872)	(4,031)	(11,374)	1,233
Net (Loss) Income		(71,780)	5,559	(97,752)	(2,323)
Preferred Distributions		(6,044)	(6,043)	(12,088)	(12,087)
Net Loss Applicable to Common Shareholders		$ (67,464)	$ (443)	$ (96,583)	$ (13,146)
BASIC
Loss from Continuing Operations Applicable to Common Shareholders (in dollars per share)		$ (1.75)	$ (0.02)	$ (2.50)	$ (0.35)
DILUTED
Loss from Continuing Operations Applicable to Common Shareholders (in dollars per share)		$ (1.75)	$ (0.02)	$ (2.50)	$ (0.35)
Weighted Average Common Shares Outstanding:
Basic (in shares)		38,609,922	39,127,385	38,587,011	39,121,421
Diluted (in shares)	[1]	38,609,922	39,127,385	38,587,011	39,121,421
Noncontrolling Interests Common Units And LTIP Units
Operating Expenses:
Net (Loss) Income		$ (7,164)	$ (49)	$ (10,061)	$ (1,112)
(Income) Loss Allocated to Noncontrolling Interests		7,164	49	10,061	1,112
Consolidated Joint Ventures
Operating Expenses:
Net (Loss) Income					(300)
(Income) Loss Allocated to Noncontrolling Interests		3,196	(8)	3,196	152
Room
Revenue:
Hotel Operating Revenues:		15,139	118,980	86,222	210,465
Operating Expenses:
Hotel Operating Expenses		3,622	24,013	22,714	46,103
Food and Beverage
Revenue:
Hotel Operating Revenues:		136	18,253	10,211	32,481
Operating Expenses:
Hotel Operating Expenses		721	13,990	11,342	26,822
Other Operating
Revenue:
Hotel Operating Revenues:		2,137	10,280	10,917	19,210
Operating Expenses:
Hotel Operating Expenses		$ 14,035	$ 44,607	$ 49,841	$ 84,796

[1] Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because 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) applicable to common shareholders.

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share based payments	$ 1,799	$ 3,474	$ 4,255	$ 5,432
Antidilutive securities excluded from computation of earnings per share (in shares)	4,676,388	4,316,531	4,839,454	4,274,583
Common Units and Vested LTIP Units
Antidilutive securities excluded from computation of earnings per share (in shares)	3,943,319	3,379,354	3,891,032	3,344,178
Unvested Stock Awards and LTIP Units Outstanding
Antidilutive securities excluded from computation of earnings per share (in shares)	547,315	616,937	267,443	423,399
Contingently Issuable Share Awards
Antidilutive securities excluded from computation of earnings per share (in shares)	185,754	320,240	680,979	507,006

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net (Loss) Income	$ (71,780)	$ 5,559	$ (97,752)	$ (2,323)
Other Comprehensive Loss
Change in Fair Value of Derivative Instruments	(2,020)	(4,122)	(33,146)	(5,902)
Less:  Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income	1,228	(1,112)	2,205	(2,253)
Total Other Comprehensive Loss	(792)	(5,234)	(30,941)	(8,155)
Comprehensive (Loss) Income	(72,572)	325	(128,693)	(10,478)
Preferred Distributions	(6,044)	(6,043)	(12,088)	(12,087)
Comprehensive Loss Attributable to Common Shareholders	(68,150)	(5,261)	(124,690)	(20,658)
Noncontrolling Interests Common Units And LTIP Units
Net (Loss) Income	(7,164)	(49)	(10,061)	(1,112)
Other Comprehensive Loss
Less: Comprehensive Loss (Income) Attributable to Noncontrolling Interests	7,270	465	12,895	1,755
Consolidated Joint Ventures
Net (Loss) Income				(300)
Other Comprehensive Loss
Less: Comprehensive Loss (Income) Attributable to Noncontrolling Interests	$ 3,196	$ (8)	$ 3,196	$ 152

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Common Shares	Common Shares Class A Common Shares	Common Shares Class B Common Shares	Preferred Shares	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Distributions in Excess of Net Income	Total Shareholders' Equity	Noncontrolling Interests Common Units And LTIP Units	Total Equity	Consolidated Joint Ventures
Balance at Dec. 31, 2018			$ 395	$ 0	$ 147	$ 1,155,776	$ 4,227	$ (267,740)	$ 892,805	$ 62,010	$ 954,815	$ 2,708
Balance (in shares) at Dec. 31, 2018		39,458,626			14,703,214					3,749,665
Increase (Decrease) in Stockholders' Equity
Repurchase of Common Shares			(3)			(4,693)			(4,696)		(4,696)
Repurchase of Common Shares (in shares)		(273,538)
Issuance Costs						21			21		21
Dividends and Distributions declared:
Common Shares								(21,967)	(21,967)		(21,967)
Preferred Stock								(12,087)	(12,087)		(12,087)
Common Units										$ (1,158)	(1,158)
LTIP Units										$ (1,362)	(1,362)
Dividend Reinvestment Plan	$ 42					42			42		42
Dividend Reinvestment Plan (in shares)		2,496
Share Based Compensation:
Grants			1			400			401		401
Grants (in shares)		53,340								530,281
Amortization						1,583			1,583	$ 6,839	8,422
Equity Contribution to Consolidated Joint Venture												300
Change in Fair Value of Derivative Instruments	(8,155)						(7,512)		(7,512)	(643)	(8,155)
Adjustment to Record Noncontrolling Interest at Redemption Value						(148)			(148)		(148)	148
Net Loss	(2,323)							(911)	(911)	(1,112)	(2,023)	(300)
Balance at Jun. 30, 2019			393	0	$ 147	1,152,939	(3,285)	(302,705)	847,489	$ 64,574	912,063	2,856
Balance (in shares) at Jun. 30, 2019		39,240,924			14,703,214					4,279,946
Balance at Mar. 31, 2019			392	0	$ 147	1,151,654	1,534	(291,282)	862,445	$ 64,808	927,253	2,848
Balance (in shares) at Mar. 31, 2019		39,213,269			14,703,214					4,279,946
Increase (Decrease) in Stockholders' Equity
Issuance Costs						(21)			(21)		(21)
Dividends and Distributions declared:
Common Shares								(10,987)	(10,987)		(10,987)
Preferred Stock								(6,044)	(6,044)		(6,044)
Common Units										$ (580)	(580)
LTIP Units										(620)	(620)
Dividend Reinvestment Plan						21			21		21
Dividend Reinvestment Plan (in shares)		1,231
Share Based Compensation:
Grants			1			400			401		401
Grants (in shares)		26,424
Amortization						893			893	1,430	2,323
Change in Fair Value of Derivative Instruments	(5,234)						(4,819)		(4,819)	(415)	(5,234)
Adjustment to Record Noncontrolling Interest at Redemption Value						(8)			(8)		(8)	8
Net Loss	5,559							5,608	5,608	(49)	5,559
Balance at Jun. 30, 2019			393	0	$ 147	1,152,939	(3,285)	(302,705)	847,489	$ 64,574	912,063	2,856
Balance (in shares) at Jun. 30, 2019		39,240,924			14,703,214					4,279,946
Balance at Dec. 31, 2019	871,801		387	0	$ 147	1,144,808	1,010	(338,695)	807,657	$ 64,144	871,801	3,196
Balance (in shares) at Dec. 31, 2019		38,652,650			14,703,214					4,279,946
Increase (Decrease) in Stockholders' Equity
Issuance Costs						(30)			(30)		(30)
Dividends and Distributions declared:
Preferred Stock								(1,007)	(1,007)		(1,007)
Dividend Reinvestment Plan	14					14			14		14
Dividend Reinvestment Plan (in shares)		1,094
Share Based Compensation:
Grants			1						1		1
Grants (in shares)		135,627								1,101,924
Amortization						1,303			1,303	$ 4,466	5,769
Change in Fair Value of Derivative Instruments	(30,941)						(28,107)		(28,107)	(2,834)	(30,941)
Adjustment to Record Noncontrolling Interest at Redemption Value	(3,196)					3,196			3,196		3,196
Net Loss	(97,752)							(87,691)	(87,691)	(10,061)	(97,752)
Balance at Jun. 30, 2020	751,051		388	0	$ 147	1,149,291	(27,097)	(427,393)	695,336	$ 55,715	751,051	0
Balance (in shares) at Jun. 30, 2020		38,789,371			14,703,214					5,381,870
Balance at Mar. 31, 2020			387	0	$ 147	1,145,450	(26,411)	(362,777)	756,796	$ 59,162	815,958	3,196
Balance (in shares) at Mar. 31, 2020		38,673,242			14,703,214					4,279,946
Increase (Decrease) in Stockholders' Equity
Issuance Costs						(10)			(10)		(10)
Share Based Compensation:
Grants			1						1		1
Grants (in shares)		116,129								1,101,924
Amortization						655			655	$ 3,823	4,478
Change in Fair Value of Derivative Instruments	(792)						(686)		(686)	(106)	(792)
Adjustment to Record Noncontrolling Interest at Redemption Value						3,196			3,196		3,196	(3,196)
Net Loss	(71,780)							(64,616)	(64,616)	(7,164)	(71,780)
Balance at Jun. 30, 2020	$ 751,051		$ 388	$ 0	$ 147	$ 1,149,291	$ (27,097)	$ (427,393)	$ 695,336	$ 55,715	$ 751,051	$ 0
Balance (in shares) at Jun. 30, 2020		38,789,371			14,703,214					5,381,870

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Dividends [Abstract]
Common Shares, Dividends declared (in dollars per share)	$ 0.28	$ 0.56
Common Units, Distributions declared (in dollars per share)	0.28	0.56
LTIP Units, Distribution Per Unit (in dollars per share)	$ 0.28	$ 0.56

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities:
Net (Loss) Income	$ (97,752)	$ (2,323)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Loss on Impairment of Assets	1,069	0
Deferred Taxes	11,390	(1,348)
Depreciation	48,273	47,791
Amortization	1,116	1,107
Loss on Debt Extinguishment	0	17
Equity in Loss (Income) of Unconsolidated Joint Ventures	1,520	(480)
Distributions from Unconsolidated Joint Ventures	0	478
Loss Recognized on Change in Fair Value of Derivative Instrument	2,205	163
Share Based Compensation Expense	4,255	5,432
(Increase) Decrease in:
Hotel Accounts Receivable	5,412	(325)
Other Assets	4,884	(1,317)
Due from Related Parties	3,750	(2,453)
(Decrease) Increase in:
Accounts Payable, Accrued Expenses and Other Liabilities	(2,479)	129
Net Cash Provided by (Used in) Operating Activities	(16,357)	46,871
Investing Activities:
Capital Expenditures	(15,612)	(21,230)
Cash Paid for Hotel Development Projects	21
Cash Paid for Hotel Development Projects		(467)
Contributions to Unconsolidated Joint Ventures	(600)	(4,000)
Distributions from Unconsolidated Joint Ventures	0	1,022
Net Cash Used in Investing Activities	(16,191)	(24,675)
Financing Activities:
Borrowings Under Line of Credit, Net	47,000	27,000
Principal Repayment of Mortgages and Notes Payable	(650)	(56,636)
Proceeds of Paycheck Protection Program ("PPP") Loans	18,936	0
Repayment of PPP Loans	(18,936)	0
Cash Paid for Deferred Financing Costs	(2,104)	(643)
Repurchase of Common Shares	0	(4,624)
Dividends Paid on Common Shares	(10,809)	(21,980)
Dividends Paid on Preferred Shares	(6,044)	(12,087)
Distributions Paid on Common Units and LTIP Units	(1,198)	(2,371)
Other Financing Activities	(30)	(91)
Net Cash Provided by (Used in) Financing Activities	26,165	(15,432)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	(6,383)	6,764
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period	36,985	40,783
Cash, Cash Equivalents, and Restricted Cash - End of Period	$ 30,602	$ 47,547

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis Of Presentation

he accompanying unaudited consolidated financial statements of Hersha Hospitality Trust (“we,” “us,” “our” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and with the general instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future period. Accordingly, readers of these consolidated interim financial statements should refer to the Company’s audited financial statements prepared in accordance with US GAAP, and the related notes thereto, for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as certain footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from this report pursuant to the rules of the Securities and Exchange Commission.

We are a self-administered Maryland real estate investment trust that was organized in May 1998 and completed our initial public offering in January 1999. Our common shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “HT.” We own our hotels and our investments in joint ventures through our operating partnership, Hersha Hospitality Limited Partnership (“HHLP” or “the Partnership”), for which we serve as the sole general partner. As of June 30, 2020, we owned an approximate 87.8% partnership interest in HHLP, including a 1.0% general partnership interest.

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with US GAAP and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned Taxable REIT Subsidiary Lessee (“TRS Lessee”), 44 New England Management Company. All significant inter-company amounts have been eliminated.

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.

Variable Interest Entities

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. 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, there have been no changes to the operating structure of our legal entities during the six months ended June 30, 2020 and, therefore, there are no changes to our evaluation of VIE's as presented within our annual report presented on Form 10-K for the year ended December 31, 2019.

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

Noncontrolling Interest

We classify the noncontrolling interests of our common units of limited partnership interest in HHLP (“Common Units”), and Long Term Incentive Plan Units (“LTIP Units”) as equity. LTIP Units are a separate class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances. The noncontrolling interest of Common Units and LTIP Units totaled $55,715 as of June 30, 2020 and $64,144 as of December 31, 2019. As of June 30, 2020, there were 5,381,870 Common Units and LTIP Units outstanding with a fair market value of $31,000, based on the price per share of our common shares on the NYSE on such date. In accordance with the partnership agreement of HHLP, holders of these Common 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.

Net income or loss attributed to Common Units and LTIP Units is included in net income or loss but excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

We entered into a joint venture that owns the Ritz-Carlton Coconut Grove, FL, in which our joint venture partner has a noncontrolling equity interest of 15% in the property. Hersha Holding RC Owner, LLC, the owner entity of the Ritz-Carlton Coconut Grove joint venture ("Ritz Coconut Grove"), will distribute income based on cash available for distribution which will be distributed as follows: (1) to us until we receive a cumulative return on our contributed senior common equity interest, currently at 8%, and (2) then to the owner of the noncontrolling interest until they receive a cumulative return on their contributed junior common equity interest, currently at 8%, and (3) then 75% to us and 25% to the owner of the noncontrolling interest until we both receive a cumulative return on our contributed senior common equity interest, currently at 12%, and (4) finally, any remaining operating profit shall be distributed 70% to us and 30% to the owner of the noncontrolling interest. Additionally, the noncontrolling interest in the Ritz Coconut Grove has the right to put their ownership interest to us for cash consideration at any time during the life of the venture. The balance sheets and financial results of the Ritz Coconut Grove are included in our consolidated financial statements and book value of the noncontrolling interest in the Ritz Coconut Grove is classified as temporary equity within our Consolidated Balance Sheets. The noncontrolling interest in the Ritz Coconut Grove was initially measured at fair value upon formation of the joint venture and will be subsequently measured at the greater of historical cost or the put option redemption value. For the three and six months ended June 30, 2020, based on the income allocation methodology described above, the noncontrolling interest in this joint venture was allocated losses of $0. For the three and six months ended June 30, 2019, the noncontrolling interest in the joint venture was allocated losses of $0 and $300, respectively. This is recorded as part of the Loss Allocated to Noncontrolling Interests line item within the Consolidated Statements of Operations. On June 30, 2020 we reclassified $3,196 from Noncontrolling Joint Venture Interest to Additional Paid in Capital to recognize the noncontrolling interest at the put option redemption value of $0.

Shareholders’ Equity

Terms of the Series C, Series D, and Series E Preferred Shares outstanding at June 30, 2020 and December 31, 2019 are summarized as follows:

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

							Dividend Per Share
	Shares Outstanding						Six Months Ended June 30,
Series	June 30, 2020	December 31, 2019	Aggregate Liquidation Preference		Distribution Rate		2020	2019
Series C	3,000,000	3,000,000	$	75,000	6.875	%	—	$	0.8594
Series D	7,701,700	7,701,700	$	192,500	6.500	%	—	$	0.8126
Series E	4,001,514	4,001,514	$	100,000	6.500	%	—	$	0.8126
Total	14,703,214	14,703,214

Liquidity and Management's Plan

Due to the COVID-19 pandemic and the effects of travel restrictions both globally and in the United States, the hospitality industry has experienced drastic drops in demand. The global impact of the pandemic has been rapidly evolving and, in the United States, certain states and cities, including most where we own properties, have reacted by instituting various restrictive measures such as quarantines, restrictions on travel, school closings, "stay at home" rules and restrictions on types of business that may continue to operate. During the first quarter of 2020 as a result of the impact of the COVID-19 pandemic, we had temporarily closed 21 of our 48 hotels while our remaining hotels operated in a significantly reduced capacity. During the second quarter of 2020 we reopened 5 hotels, resulting in 16 hotels remaining closed as of June 30, 2020. We believe the ongoing effects of the COVID-19 pandemic on our operations have had, and will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because the lodging industry has not previously experienced such an abrupt and drastic reduction in hotel demand, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration, and speed of the pandemic is uncertain and we cannot estimate when travel demand will recover. As a consequence, we cannot estimate the impact on our business, financial condition, or operating results with reasonable certainty, but we expect a net loss on a U.S. GAAP basis for the year ending December 31, 2020. On April 2, 2020, we amended our existing Credit Agreement (as defined below) and received $100,000 in available funds on our Line of Credit (as defined below), of which we drew $25,000 during April 2020 and $10,000 during July 2020. Additionally, the amendment provided a waiver of covenants under our Credit Facility (as defined below) through March 31, 2021 and changed the Credit Facility from an unsecured borrowing facility to a secured borrowing facility. Based on this amendment along with cost savings measures throughout our operations, we believe that we will be able to generate sufficient liquidity to satisfy our obligations for the next twelve months, absent a breach of Credit Facility covenants described below.

At June 30, 2020, we were in compliance with all debt covenants related to our mortgage borrowings with the exception of one mortgage where we failed a debt service coverage ratio requirement, which is not considered an event of default but triggers a cash escrow requirement related to future debt service. We have one mortgage borrowing in the amount of $25,000 that will mature within the next twelve months, which we expect to be able to extend the maturity based on the provisions within the existing mortgage or refinance the mortgage. After considering the effect of the COVID-19 pandemic on our consolidated operations, it is probable that we will fail certain financial covenants within certain property-level mortgage borrowings or under our Credit Facility within the next twelve months. We have received financial covenant waivers from certain of our mortgage lenders, which provided us relief from financial covenants for a period of time that does not extend beyond the first quarter of 2021. For mortgages with financial covenants, the lenders' remedy of a covenant failure would be a requirement to escrow funds for the purpose of meeting our future debt payment obligations, with the exception of one mortgage borrowing. In this instance, the lender could require prepayment of the mortgage in full, however, we believe we would have sufficient available funds on our Credit Facility to accommodate this remedy of covenant default. As noted above, the covenant waivers on our Credit Facility extend through March 31, 2021; however, we believe that it is probable we will breach certain of our Credit Facility covenants when measured for the period ended June 30, 2021. This potential event of default could lead to potential acceleration of amounts due under the Credit Facility. Notwithstanding our belief that we

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

probably will be successful in renegotiating the terms of our Credit Facility prior to an event of default, we believe that we will continue to have access to the capital markets. Also, we could choose to raise cash by selling hotel properties, although there can be no assurances we would be successful on terms favorable to us.

Management’s primary mitigation plan to avoid a default under its Credit Agreement is to obtain a further waiver from its creditors or amend the Credit Facility in a manner to avoid an event of default. There can be no assurance that we will be able to obtain a waiver or amendment in a timely manner, or on acceptable terms, if at all. The failure to obtain a waiver or amendment, or otherwise repay the debt, could lead to an event of default, which would have a material adverse effect on our financial condition, which gives rise to substantial doubt about our ability to continue as a going concern. As a result, management determined that the future valuation and ability to realize the benefits of our deferred tax assets is not probable and we have recorded a full valuation allowance against our net deferred tax assets as of June 30, 2020.

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.

Identifiable assets, liabilities, and noncontrolling interests 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.

Properties intended to be sold are designated as “held for sale” on the balance sheet. In accordance with ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations, we evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.

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.

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

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 June 30, 2020, based on our analysis and given consideration to the impairment charge taken on one of our hotels held for sale, we have determined that the estimated future cash flow of each of the properties in our portfolio is sufficient to recover its carrying value.

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. As a result of identified structural risks of interbank offered rates, in particular, the London Interbank Offered Rate (LIBOR), reference rate reform is underway to identify alternative reference rates that are more observable or transaction based. The update provides guidance in accounting for changes in contracts, hedging relationships, and other transactions as a result of this reference rate reform. The optional expedients and exceptions contained within this update, in general, only apply to contract amendments and modifications entered into prior to January 1, 2023. The provisions of this update that will most likely affect our financial reporting process relate to modifications of contracts with lenders and the related hedging contracts associated with each respective modified borrowing contract. In general, the provisions of the update would benefit the Company by allowing, among other things, the following:

•Allowing modifications of debt contracts with lenders that fall under the guidance of ASC Topic 470 to be accounted for as a non-substantial modification and not be considered a debt extinguishment.

•Allowing a change to contractual terms of a hedging instrument in conjunction with reference rate reform to not require a dedesignation of the hedging relationship.

•Allowing a change to the interest rate used for margining, discounting, or contract price alignment for a derivative that is a cash flow hedge to not be considered a change to the critical terms of the hedge and will not require a dedesignation of the hedging relationship.

We have not entered into any contract modifications yet, as it directly relates to reference rate reform but we anticipate having to undertake such modifications in the future as a majority of our contracts with lenders and hedging counterparties are indexed to LIBOR. While we anticipate the impact of this update to be to the benefit of the Company, we are still evaluating the overall impact to the Company.

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INVESTMENT IN HOTEL PROPERTIES

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

INVESTMENT IN HOTEL PROPERTIES

INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consists of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Land	$	505,156	$	518,243
Buildings and Improvements	1,686,057		1,710,621
Furniture, Fixtures and Equipment	297,465		294,527
Construction in Progress	4,706		10,202
	2,493,384		2,533,593
Less Accumulated Depreciation	(590,920)		(557,620)
Total Investment in Hotel Properties *	$	1,902,464	$	1,975,973

* The net book value of investment in hotel property at Ritz Coconut Grove, which is a variable interest entity, is $44,139 and $44,854 at June 30, 2020 and December 31, 2019, respectively.

Acquisitions

For the six months ended June 30, 2020 and 2019, we acquired no hotel properties.

Hotel Dispositions

For the six months ended June 30, 2020 and 2019, we disposed of no hotel properties.

Assets Held For Sale

We have classified two assets as held for sale as of June 30, 2020. The sales of Duane Street Hotel and Blue Moon Hotel are expected to close in 2020 and are included as held for sale assets as of June 30, 2020. During the second quarter of 2020, the Company amended the purchase and sale agreement with the buyer of the hotel to reduce the purchase price by $2,000. As a result of the reduced sales price and after consideration of selling costs to the Company, management determined that the carrying value of the hotel exceeded the anticipated net proceeds from sale, resulting in a $1,069 impairment charge recorded during the three months ended June 30, 2020.

The table below shows the balances for the properties that were classified as assets held for sales as of June 30, 2020.

	June 30, 2020
Land	$	13,087
Buildings and Improvements	35,482
Furniture, Fixtures and Equipment	6,418
	54,987
Less Accumulated Depreciation	(14,817)
Assets Held for Sale	$	40,170

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of June 30, 2020 and December 31, 2019, our investment in unconsolidated joint ventures consisted of the following:

		Percent
Joint Venture	Hotel Properties	Owned		June 30, 2020		December 31, 2019
Cindat Hersha Owner JV, LLC	Hilton and IHG branded hotels in NYC	31	%	$	—	$	—
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50	%	555		1,434
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50	%	—		—
SB Partners Three, LLC	Home2 Suites, South Boston, MA	50	%	6,972		7,012
				$	7,527	$	8,446

On January 3, 2020, we entered into an agreement with our joint venture partner for our partner to purchase our membership interests in Hiren Boston, LLC and SB Partners, LLC. Net proceeds from the sale of our interests are anticipated to be approximately $26,000 and this transaction is expected to close during the fourth quarter of 2020.

Income/Loss Allocation

Cindat Hersha Owner JV, LLC cash available for distribution will be distributed to (1) Cindat until they receive a return on their contributed $143,650 senior common equity interest, currently at 8%, and (2) then to us until we receive an 8% return on our contributed $64,357 junior common equity interest. Any cash available for distribution remaining will be split 31% to us and 69% to Cindat. Cindat’s senior common equity return is reduced by 0.5% annually for 4 years following the closing until it is set at a rate of 8% for the remainder of the life of the joint venture.  As of June 30, 2020, based on the income allocation methodology described above, the Company has absorbed cumulative losses equal to our accounting basis in the joint venture resulting in a $0 investment balance in the table above, however, we currently maintain a positive equity balance within the venture. This difference is due to difference in our basis inside the venture versus our basis outside of the venture, which is explained later in this note.

For SB Partners, LLC, Hiren Boston, LLC, and SB Partners Three, LLC, income or loss is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. This results in an income allocation consistent with our percentage of ownership interests.

Any difference between the carrying amount of any of our investments noted above 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 three and six months ended June 30, 2020 and 2019, for our investments in unconsolidated joint ventures is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cindat Hersha Owner JV, LLC	$	—	$	—	$	—	$	—
Hiren Boston, LLC	(477)		315		(880)		138
SB Partners, LLC	—		—		(600)		375
SB Partners Three, LLC	(25)		(16)		(40)		(33)
(Loss) Income from Unconsolidated Joint Venture Investments	$	(502)	$	299	$	(1,520)	$	480

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 June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019.

Balance Sheets

	June 30, 2020		December 31, 2019
Assets
Investment in Hotel Properties, Net	$	584,038	$	579,287
Other Assets	28,359		33,891
Total Assets	$	612,397	$	613,178
Liabilities and Equity
Mortgages and Notes Payable	$	445,533	$	430,282
Other Liabilities	22,452		19,185
Equity:
Hersha Hospitality Trust	7,996		9,588
Joint Venture Partner(s)	136,977		154,998
Accumulated Other Comprehensive Loss	(561)		(875)
Total Equity	144,412		163,711
Total Liabilities and Equity	$	612,397	$	613,178

Statements of Operations

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Room Revenue	$	5,588	$	26,995	$	16,932	$	43,346
Other Revenue	—		622		787		1,243
Operating Expenses	(3,265)		(11,890)		(11,613)		(21,921)
Lease Expense	(170)		(164)		(354)		(365)
Property Taxes and Insurance	(3,154)		(3,051)		(6,438)		(6,103)
General and Administrative	(553)		(1,505)		(1,516)		(2,711)
Depreciation and Amortization	(3,925)		(3,694)		(7,840)		(7,354)
Interest Expense	(5,582)		(7,196)		(11,869)		(14,343)
Net (Loss) Income	$	(11,061)	$	117	$	(21,911)	$	(8,208)

The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of June 30, 2020 and December 31, 2019.

	June 30, 2020		December 31, 2019
Our share of equity recorded on the joint ventures' financial statements	$	7,996	$	9,588
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)	(469)		(1,142)
Investment in Unconsolidated Joint Ventures	$	7,527	$	8,446

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

•the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements;

•accumulated amortization of our equity in joint ventures that reflects the difference in our portion of the fair value of joint ventures' assets on the date of our investment when compared to the carrying value of the assets recorded on the joint ventures’ financial statements (this excess or deficit investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on our consolidated statement of operations); and

•cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements, if any.

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OTHER ASSETS

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER ASSETS

OTHER ASSETS

Other Assets

Other Assets consisted of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Derivative Asset	$	—	$	2,514
Deferred Financing Costs	3,019		1,330
Prepaid Expenses	6,189		11,279
Investment in Statutory Trusts	1,548		1,548
Investment in Non-Hotel Property and Inventories	2,714		2,987
Deposits with Unaffiliated Third Parties	2,575		2,577
Deferred Tax Asset, Net of Valuation Allowance of $20,363 and $497, respectively	—		11,390
Property Insurance Receivable	1,788		1,788
Other	3,163		2,764
	$	20,996	$	38,177

Derivative Asset – This category represents the Company’s gross asset fair value of interest rate swaps and interest rate caps.  Any swaps and caps resulting in a liability to the Company are accounted for separately within Other Liabilities on the Balance Sheets.

Deferred Financing Costs – This category represents financing costs paid by the Company to establish our Line of Credit. These costs have been capitalized and will amortize to interest expense over the life of the Line of Credit.

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

Investment in Statutory Trusts – We have an investment in the common stock of Hersha Statutory Trust I and Hersha Statutory Trust II.

Investment in Non-Hotel Property and Inventories – This category represents the costs paid and capitalized by the Company for items such as office leasehold improvements, furniture and equipment, and property inventories.

Deposits with Unaffiliated Third Parties – These deposits represent deposits made by the Company with unaffiliated third parties for items such as lease security deposits, utility deposits, and deposits with unaffiliated third party management companies.

Deferred Tax Asset – We have recorded a valuations allowance resulting in net deferred tax assets of $0 as of June 30, 2020. We have considered various factors, including future reversals of existing taxable temporary differences, future taxable income and tax planning strategies in determining the ability to realize the benefits of our deferred tax assets. In Note 1, we also disclosed factors that have given rise to substantial doubt in our ability to continue as a going concern, which is a primary factor in our determination that a full valuation allowance against our net deferred tax assets was appropriate to record during the three months ended June 30, 2020.

Property Insurance Receivable – This category represents the amount that we expect to receive from our insurance companies for reimbursement of costs incurred as a result of water damage at The Boxer.

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DEBT

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

DEBT

DEBT

Mortgages

Mortgages payable at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020		December 31, 2019
Mortgage Indebtedness	$	333,298	$	333,948
Net Unamortized Premium	585		821
Net Unamortized Deferred Financing Costs	(2,112)		(2,489)
Mortgages Payable	$	331,771	$	332,280

Net Unamortized Deferred Financing Costs associated with entering into mortgage indebtedness are deferred and amortized over the life of the mortgages. Net Unamortized Premiums are also amortized over the remaining life of the loans.

Mortgage indebtedness balances are subject to fixed and variable interest rates, which ranged from 2.16% to 6.30% as of June 30, 2020. Aggregate interest expense incurred under the mortgage loans payable totaled $3,031 and $4,077, and $6,516 and $8,067, during the three and six months ended June 30, 2020 and 2019, respectively. The impact on interest expense related to the interest rate swap contracts on mortgages resulted in expense of $552 and $585 for the three and six months ended June 30, 2020 and a decrease to interest expense of $99 and $196 for the three and six months ended June 30, 2019.

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 all debt covenants contained in the loan agreements securing our consolidated hotel properties with the exception of one mortgage were met as of June 30, 2020. The failure of meeting a minimum debt service coverage ratio requirement in this one mortgage is not considered an event of default under the loan agreement but rather, triggers a cash escrow requirement related to future debt service.

As of June 30, 2020, the maturity dates for the outstanding mortgage loans ranged from January 2021 to September 2025.

Unsecured 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 of notes issued to each of Hersha Statutory Trust I and Hersha Statutory Trust II bear interest at a variable rate of LIBOR plus 3% per annum. This rate resets 2 business days prior to each quarterly payment. The face value of the notes payable is offset by $785 and $812 as of June 30, 2020 and December 31, 2019, respectively, in net deferred financing costs incurred as a result of entering into these indentures. The deferred financing costs are amortized over the life of the notes payable. The weighted average interest rate on our two junior subordinated notes payable was 4.08% and 5.64%, and 4.45% and 5.66%, during the three and six months ended June 30, 2020 and 2019, respectively. Interest expense on Unsecured Notes Payable in the amount of $532 and $734, and $1,160 and $1,466, was recorded for the three and six months ended June 30, 2020 and 2019, respectively.

Credit Facilities as of June 30, 2020

We maintain three credit agreements which aggregate to $950,900 with Citigroup Global Markets Inc., Wells Fargo Bank, Inc. and various other lenders. Our credit agreement (the "Credit Agreement") provides for a $457,000 senior credit facility (“Credit Facility”). The Credit Facility consists of a $250,000 senior revolving line of credit (“Line of Credit”) and a $207,000 senior term loan ("First Term Loan"). The Credit Facility expires on August 10, 2022, and, provided no event of default has occurred, we may request that the lenders renew the Credit Facility for an additional one-year period. The Credit Facility is also expandable to $857,000 at our request, subject to the satisfaction of certain conditions.

We maintain another credit agreement which provides for a $300,000 senior term loan agreement (“Second Term Loan”) and expires on September 10, 2024.

A separate credit agreement provides for a $193,900 senior term loan agreement (“Third Term Loan” and collectively with the Credit Agreement and the Second Term Loan, the "Credit Agreements") and expires on August 2, 2021.

On April 2, 2020, the Company signed amendments to the Credit Agreements, which, among other things, changed each borrowing facility under the agreements from unsecured to secured. Additionally, the Company received $100,000 in available funds on its Line of Credit, of which $25,000 was drawn during April 2020 and $10,000 during July 2020.

The amount that we can borrow at any given time under our Line of Credit, and the individual term loans (each a “Term Loan” and together the “Term Loans”) is governed by certain operating metrics of designated hotel properties known as borrowing base assets. As of June 30, 2020, the following hotel properties secured the amended facilities under the Credit Agreements: 

- Courtyard, Brookline, MA	- Mystic Marriott Hotel & Spa, Groton, CT
- Holiday Inn Express, Cambridge, MA	- Hampton Inn, Washington, DC
- Envoy Hotel, Boston, MA	- Ritz Carlton, Washington, DC
- The Boxer, Boston, MA	- Hilton Garden Inn, M Street, Washington, DC
- Hampton Inn, Seaport, NY	- Residence Inn, Coconut Grove, FL
- The Duane Street Hotel, NY	- The Winter Haven, Miami, FL
- NU Hotel, Brooklyn, NY	- The Blue Moon, Miami, FL
- Holiday Inn Express, 29th Street, NY	- The Cadillac Hotel and Beach Club, Miami, FL
- The Gate JFK Airport, New York, NY	- The Parrot Key Hotel & Resort, Key West, FL
- Hilton Garden Inn, JFK Airport, New York, NY	- TownePlace Suites, Sunnyvale, CA
- Hyatt House White Plains, NY	- The Ambrose Hotel, Santa Monica, CA
- Sheraton, Wilmington South, DE	- Courtyard, San Diego, CA
- Hampton Inn, Philadelphia, PA	- The Pan Pacific Hotel, Seattle, WA
- The Rittenhouse, Philadelphia, PA	- The Westin, Philadelphia, PA

The interest rate for borrowings under the Line of Credit and Term Loans are based on a pricing grid with a range of one month U.S. LIBOR plus a spread. The following table summarizes the balances outstanding and interest rate spread for each borrowing:

		Outstanding Balance
Borrowing	Spread	June 30, 2020		December 31, 2019
Line of Credit	1.50% to 2.25%	$	95,000	$	48,000
Term Loan:
First Term Loan	1.45% to 2.20%	$	207,000	$	207,000
Second Term Loan	1.35% to 2.00%	300,000		300,000
Third Term Loan	1.45% to 2.20%	193,900		193,900
Deferred Loan Costs		(3,303)		(3,717)
Total Term Loan		$	697,597	$	697,183

The Company received a waiver of Credit Facility covenants through March 31, 2021 in connection with the April 2, 2020 amendment to the Credit Agreement. Upon expiration of the covenant waiver in March 2021, the following covenant requirements will again become effective. The Credit Facility and the Term Loans include certain financial covenants and require that we maintain: (1) a minimum tangible net worth (calculated as total assets, plus accumulated depreciation, less total liabilities, intangibles and other defined adjustments) of $1,119,500, plus an amount equal to 75% of the net cash proceeds of all issuances and primary sales of equity interests of the parent guarantor or any of its subsidiaries consummated following the closing date; (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 1.50 to 1.00;

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

- a maximum secured debt leverage ratio of 45%.

The Company recorded interest expense of $5,370 and $8,903, and $12,404 and $17,539, related to borrowings drawn on the Credit Facility and Term Loans for the three and six months ended June 30, 2020 and 2019, respectively. The impact on interest expense related to the interest rate swap contracts on the Credit Facility resulted in expense of $3,133 and $4,219 for the three and six months ended June 30, 2020 and a decrease to interest expense of $1,000 and $2,095 for the three and six months ended June 30, 2019. The weighted average interest rate, inclusive of the effect of derivative instruments, on the Credit Facility and Term Loans was 4.23% and 4.17%, and 4.21% and 4.15%, for the three and six months ended June 30, 2020 and 2019, respectively.

Paycheck Protection Program Loans

During the three months ended June 30, 2020, the Company applied for and received $18,936 in loans pursuant to the Paycheck Protection Program ("the PPP") under the Coronavirus Aid, Relief, and Economic Security Act. All funds borrowed under the PPP were returned without penalty during the three months ended June 30, 2020.

Deferred Financing Costs

As noted above, costs associated with entering into mortgages, notes payable and our credit facilities are deferred and amortized over the life of the debt instruments. The deferred costs related to mortgages and term loans and unsecured notes payable are presented as reductions in the respective debt balances. Amortization of deferred costs for the three and six months ended June 30, 2020 and 2019 was $702 and $560, and $1,267 and $1,134, respectively.

New Debt/Refinance

On April 2, 2020, we amended our Credit Agreements, which covered the Credit Facility and borrowing base of assets on the Line of Credit, to access an additional $100,000. With these amendments, we received waivers on all financial covenants through March 31, 2021. The proceeds from the borrowings drawn will be used to fund the operating expenses of the business. See "Liquidity, Capital Resources and Equity Offerings".

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LEASES

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

LEASES

LEASES

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides the principles for the recognition, measurement, presentation and disclosure of leases. The Company adopted the provisions of the update effective January 1, 2019. We elected the modified retrospective transition method upon adoption, which resulted in no cumulative-effect adjustment to the balance of opening retained earnings. As part of our adoption, we elected to utilize the package of practical expedients which allowed us to not reassess existing contracts for embedded leases and not reassess the classification of existing leases. As a result of our adoption, the Company recorded a lease liability and corresponding right of use asset of $55,515 at January 1, 2019 for leases where we are the lessee. Our most significant leases are land leases. We own five hotels within our consolidated portfolio of hotels where we do not own the land on which the hotels reside, rather we lease the land from an unrelated third-party lessor. All of our land leases are classified as operating leases and have initial terms, with extension options that range from May 2062 to October 2103. Based on the nature of these leases, the Company assumed that all extension options would be fully executed. For land leases that include variable payments, those include payments that are tied to an index such as the consumer price index or include rental payments based partially on the hotel's revenues. Two additional office space leases are also factored into the lease liability and are classified as operating leases with terms ranging from January 2022 to December 2027. For office space leases that include variable payments, those include payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance.

The Company applied judgments related to the determination of the discount rates used to calculate the lease liability upon adoption at January 1, 2019. Since the discount rate implicit in the leases could not be readily determinable, we calculated our incremental borrowing rate as prescribed by ASC Topic 842. We utilized judgments and estimates regarding the Company's market credit rating, comparable market bond yield curve, and adjustments to market yield curves to determine a securitized rate.

We are also a lessor in certain office space and retail lease agreements related to our hotels and the adoption of this ASU did not have a material impact on our accounting for leases where we are the lessor. The adoption of this ASU did not impact revenue recognition policies for the Company.

The components of lease costs for the three months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	1,050	$	121	$	1,171	$	973	$	121	$	1,094
Variable lease costs	8		87		95		141		88		229
Total lease costs	$	1,058	$	208	$	1,266	$	1,114	$	209	$	1,323

The components of lease costs for the six months ended June 30, 2020 and 2019 were as follows:

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	2,100	$	242	$	2,342	$	1,946	$	242	$	2,188
Variable lease costs	21		154		175		278		159		437
Total lease costs	$	2,121	$	396	$	2,517	$	2,224	$	401	$	2,625

Other information related to leases as of and for the six months ended June 30, 2020 and 2019 is as follows:

	June 30, 2020			June 30, 2019
Cash paid from operating cash flow for operating leases	$	1,951		$	2,188
Weighted average remaining lease term	64.2			64.2
Weighted average discount rate	7.86		%	7.85		%

LEASES

LEASES

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides the principles for the recognition, measurement, presentation and disclosure of leases. The Company adopted the provisions of the update effective January 1, 2019. We elected the modified retrospective transition method upon adoption, which resulted in no cumulative-effect adjustment to the balance of opening retained earnings. As part of our adoption, we elected to utilize the package of practical expedients which allowed us to not reassess existing contracts for embedded leases and not reassess the classification of existing leases. As a result of our adoption, the Company recorded a lease liability and corresponding right of use asset of $55,515 at January 1, 2019 for leases where we are the lessee. Our most significant leases are land leases. We own five hotels within our consolidated portfolio of hotels where we do not own the land on which the hotels reside, rather we lease the land from an unrelated third-party lessor. All of our land leases are classified as operating leases and have initial terms, with extension options that range from May 2062 to October 2103. Based on the nature of these leases, the Company assumed that all extension options would be fully executed. For land leases that include variable payments, those include payments that are tied to an index such as the consumer price index or include rental payments based partially on the hotel's revenues. Two additional office space leases are also factored into the lease liability and are classified as operating leases with terms ranging from January 2022 to December 2027. For office space leases that include variable payments, those include payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance.

The Company applied judgments related to the determination of the discount rates used to calculate the lease liability upon adoption at January 1, 2019. Since the discount rate implicit in the leases could not be readily determinable, we calculated our incremental borrowing rate as prescribed by ASC Topic 842. We utilized judgments and estimates regarding the Company's market credit rating, comparable market bond yield curve, and adjustments to market yield curves to determine a securitized rate.

We are also a lessor in certain office space and retail lease agreements related to our hotels and the adoption of this ASU did not have a material impact on our accounting for leases where we are the lessor. The adoption of this ASU did not impact revenue recognition policies for the Company.

The components of lease costs for the three months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	1,050	$	121	$	1,171	$	973	$	121	$	1,094
Variable lease costs	8		87		95		141		88		229
Total lease costs	$	1,058	$	208	$	1,266	$	1,114	$	209	$	1,323

The components of lease costs for the six months ended June 30, 2020 and 2019 were as follows:

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	2,100	$	242	$	2,342	$	1,946	$	242	$	2,188
Variable lease costs	21		154		175		278		159		437
Total lease costs	$	2,121	$	396	$	2,517	$	2,224	$	401	$	2,625

Other information related to leases as of and for the six months ended June 30, 2020 and 2019 is as follows:

	June 30, 2020			June 30, 2019
Cash paid from operating cash flow for operating leases	$	1,951		$	2,188
Weighted average remaining lease term	64.2			64.2
Weighted average discount rate	7.86		%	7.85		%

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COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies And Related Party Transactions [Abstract]

COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

Management Agreements

Our wholly-owned TRS, 44 New England Management Company, and certain of our joint venture entities engage eligible independent contractors in accordance with the requirements for qualification as a REIT under the Internal Revenue Code of 1986, as amended, including Hersha Hospitality Management Limited Partnership (“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 a term of five years 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 three and six months ended June 30, 2020 and 2019, base management fees incurred from HHMLP totaled $564 and $3,949, and $2,933 and $6,942, respectively, and are recorded as Hotel Operating Expenses. For the three and six months ended June 30, 2020 and 2019, 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 expenses for the three and six months ended June 30, 2020 and 2019 were $775 and $6,508, and $4,603 and $11,483, 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 three and six months ended June 30, 2020 and 2019, the Company incurred accounting fees of $319 and $315, and $644 and $631, respectively. For the three and six months ended June 30, 2020 and 2019, the Company incurred information technology fees of $103 and $102, and $208 and $203, respectively. Accounting fees and information technology fees are included in Hotel Operating Expenses.

Capital Expenditure Fees

HHMLP charges a 5% fee on certain 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 three and six months ended June 30, 2020 and 2019, we incurred fees of $56 and $989, and $956 and $1,513, respectively, which were capitalized with the cost of capital expenditures.

Acquisitions from Affiliates

We have entered into an option agreement with certain of our officers and 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.

Hotel Supplies

For the three and six months ended June 30, 2020 and 2019, we incurred charges for hotel supplies of $11 and $80, and $63 and $214, respectively. For the three and six months ended June 30, 2020 and 2019, we incurred charges for capital expenditure purchases of $176 and $3,882, and $1,056 and $4,417, 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 $26 and $9 is included in accounts payable for the purchase of hotel supplies at June 30, 2020 and December 31, 2019, respectively.

Insurance Services

The Company utilizes the services of the Hersha Group, a risk management business owned, in part, by certain executives and trustees of the Company. The Hersha Group provides consulting and procurement services to the Company related to the placement of property and casualty insurance, placement of general liability insurance, and for claims handling for our hotel properties. The total costs of property insurance that we paid through the Hersha Group were $1,388 and $1,269, and $2,984 and $2,706, for the three and six months ended June 30, 2020 and 2019, respectively. These amounts paid to the Hersha Group include insurance premiums, which are then paid to insurance carriers, and consulting procurement fees and claims handling as compensation for services.

Restaurant Lease Agreements with Independent Restaurant Group

The Company enters into lease agreements with a number of restaurant management companies for the lease of restaurants located within our hotels.  The Company previously entered into lease agreements with Independent Restaurant Group ("IRG") for restaurants at three of its hotel properties.  Jay H. Shah and Neil H. Shah, executive officers and/or trustees of the Company, collectively own a 70.0% interest in IRG.  The Company’s restaurant lease agreements with IRG generally provided for a term of five years and the payment of base rents and percentage rents, which were based on IRG’s revenue in excess of defined thresholds. Effective April 1, 2020, each of these lease agreements became a management agreement between the Company and IRG, subject to the supervision of HHMLP, as property manager. At the time of the conversion of the lease agreements to management agreements there was rent due of $103, which was forgiven due to the impact of the COVID-19 pandemic on the operations of our hotels and IRG's restaurants. The total amount of revenue recognized from IRG was $0 and $143 for the six months ended June 30, 2020 and 2019, respectively.

Due From Related Parties

The due from related parties balance as of June 30, 2020 and December 31, 2019 was approximately $2,363 and $6,113, respectively. The balances primarily consisted of working capital deposits made to HHMLP and other entities owned, in part, by certain executives and trustees of the Company.

Due to Related Parties

The balance due to related parties as of June 30, 2020 and December 31, 2019 was $0.

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FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

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 June 30, 2020, the Company’s derivative instruments represented the only financial instruments measured at fair value. Currently, the Company uses derivative instruments, such as interest rate swaps and caps, to manage its interest rate risk. 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 counter-party’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 counter-parties. However, as of June 30, 2020 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.

Derivative Instruments

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. The table on the following page presents our derivative instruments as of June 30, 2020 and December 31, 2019.

								Estimated Fair Value
								Asset / (Liability) Balance
Hedged Debt	Type	Strike Rate		Index	Effective Date	Derivative Contract Maturity Date	Notional Amount	June 30, 2020		December 31, 2019
Term Loan Instruments:
Credit Facility	Swap	1.341	%	1-Month LIBOR + 2.20%	October 3, 2019	August 2, 2021	150,000	(1,965)		539
Credit Facility	Swap	1.316	%	1-Month LIBOR + 2.20%	September 3, 2019	August 2, 2021	43,900	(563)		175
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.460	%	1-Month LIBOR + 2.00%	September 10, 2019	September 10, 2024	300,000	(15,695)		1,776
Mortgages:
Courtyard, LA Westside, Culver City, CA	Swap	1.683	%	1-Month LIBOR + 2.75%	August 1, 2017	August 1, 2020	35,000	—		(8)
Annapolis Waterfront Hotel, MD	Cap	3.350	%	1-Month LIBOR +2.65%	May 1, 2018	May 1, 2021	28,000	—		—
Hyatt, Union Square, New York, NY	Swap	1.870	%	1-Month LIBOR + 2.30%	June 7, 2019	June 7, 2023	56,000	(2,827)		(556)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn 52nd Street, New York, NY	Swap	1.540	%	1-Month LIBOR + 2.30%	December 4, 2019	December 4, 2022	44,325	(1,515)		23
Courtyard, LA Westside, Culver City, CA	Swap	0.495	%	1-Month LIBOR + 2.75%	June 1, 2020	August 1, 2021	35,000	(134)		—
								$	(32,971)	$	175

On June 1, 2020, we entered into an accelerated termination agreement on the interest rate swap associated with the $35,000 mortgage debt on the Courtyard LA Westside, which had an initial maturity of August 1, 2020. Also on June 1, 2020, we entered into a new interest rate swap associated with the $35,000 mortgage on the Courtyard LA Westside, which will mature on August 1, 2021. The fair value of the old swap at the time of termination was a liability in the amount of $67. Instead of settling this amount with cash consideration at termination, the rate and terms of the new swap were such that, the fair value at termination of the old swap would carry over as the fair value of the new swap at inception. The other comprehensive income related to the old swap will be reclassified to interest expense until the date of the original maturity date of August 1, 2020.

The fair value of swaps and our interest rate caps with a positive balance is included in other assets at June 30, 2020 and December 31, 2019. The fair value of our interest rate swaps with a negative balance is included in accounts payable, accrued expenses and other liabilities at June 30, 2020 and December 31, 2019.

The net change related to derivative instruments designated as cash flow hedges recognized as unrealized gains and losses reflected on our consolidated balance sheet in accumulated other comprehensive income was a loss of $792 and a loss of $5,234 for the three months ended June 30, 2020 and 2019, respectively, and a loss of $30,941 and a loss of $8,155 for the six months ended June 30, 2020 and 2019, respectively.

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 derivatives. The change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1,228 and $1,112 and $2,205 and $2,253 of net unrealized gains/losses from accumulated other comprehensive income as an increase/decrease to interest expense for the three and six months ended June 30, 2020 and 2019, respectively. For the next twelve months ending June 30, 2021, we estimate that an additional $14,197 will be reclassified as an increase to interest expense.

Fair Value of Debt

We estimate the fair value of our fixed rate debt and the credit spreads over variable market rates on our 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 June 30, 2020, the carrying value and estimated fair value of our debt were $1,175,131 and $1,150,217 respectively. As of December 31, 2019, the carrying value and estimated fair value of our debt were $1,128,199 and $1,098,082, respectively.

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SHARE BASED PAYMENTS

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

SHARE BASED PAYMENTS

SHARE BASED PAYMENTS

Our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan, as amended, (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. Pursuant to the 2012 Plan, equity may be awarded in the form of stock awards, LTIP Units, or performance share awards issuable.

The Short Term Incentive Program ("STIP") and the Long-Term Incentive Program ("LTIP") were incentive compensation programs the Compensation Committee of our Board of Trustees established to align executive compensation with the performance of the Company. Prior to 2019, executives participated in our legacy incentive compensation programs, including the Multi-Year Long Term Equity Incentive Program ("Multi-Year EIP").

On April 10, 2020, based on the achievement of certain metrics established under the 2019 STIP for the performance period ended December 31, 2019, the Compensation Committee awarded 833,539 LTIP Units. The awards issued pursuant to the STIP vest on December 31, 2021, the two year anniversary following the end of the performance period. On April 13, 2020, the Compensation Committee awarded 240,923 LTIP Units based on the achievement of certain metrics established under the 2017 Multi-Year EIP for the performance period ended December 31, 2019. Following the three year performance period, the awards issued pursuant to the 2017 Multi-Year EIP vest 50% on the date of issuance and 50% on December 31, 2020. The LTIP Units awarded under both the 2019 STIP and the 2017 Multi-Year EIP were determined by dividing the dollar amount of award earned by $3.58, the per share volume weighted average trading price of the Company’s common shares on the NYSE for the 20 trading days prior to April 13, 2020, the date of issuance.

A summary of our share based compensation activity from January 1, 2020 to June 30, 2020 is as follows:

	LTIP Unit Awards			Restricted Share Awards			Share Awards
	Number of Units	Weighted Average Grant Date Fair Value		Number of Restricted Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested Balance as of December 31, 2019	441,201	$	17.99	92,102	$	17.07	—
Granted	1,101,924	5.23		135,740	5.21		—	N/A
Vested	(120,459)	5.23		(75,384)	12.74		—	N/A
Forfeited	—	N/A		(113)	18.00		—	N/A
Unvested Balance as of June 30, 2020	1,422,666	$	9.19	152,345	$	8.65	—

The following table summarizes share based compensation expense for the three and six months ended June 30, 2020 and 2019 and unearned compensation as of June 30, 2020 and December 31, 2019:

	Share Based Compensation Expense								Unearned Compensation
	For the Three Months Ended				For the Six Months Ended				As of
	6/30/2020		6/30/2019		6/30/2020		6/30/2019		6/30/2020		12/31/2019
Issued Awards
LTIP Unit Awards	$	1,142	$	1,428	$	2,951	$	2,791	$	4,179	$	2,878
Restricted Share Awards	342		459		674		795		1,080		1,051
Share Awards	—		402		—		402		—		—
Unissued Awards
Market Based	315		430		630		689		2,110		2,739
Performance Based	—		755		—		755		—		—
Total	$	1,799	$	3,474	$	4,255	$	5,432	$	7,369	$	6,668

The weighted-average period of which the unrecognized compensation expense will be recorded is approximately 1.5 years for LTIP Unit Awards and 0.9 years for Restricted Share Awards.

The remaining unvested target units are expected to vest as follows:

	2020	2021	2022	2023
LTIP Unit Awards	524,540	898,126	—	—
Restricted Share Awards	3,784	144,376	3,654	531
	528,324	1,042,502	3,654	531

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

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.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
NUMERATOR:
Basic and Diluted*
Net (Loss) Income	$	(71,780)	$	5,559	$	(97,752)	$	(2,323)
Loss allocated to Noncontrolling Interests	10,360		41		13,257		1,264
Distributions to Preferred Shareholders	(6,044)		(6,043)		(12,088)		(12,087)
Dividends Paid on Unvested Restricted Shares and LTIP Units	—		(271)		—		(553)
Net Loss applicable to Common Shareholders	$	(67,464)	$	(714)	$	(96,583)	$	(13,699)
DENOMINATOR:
Weighted average number of common shares - basic	38,609,922		39,127,385		38,587,011		39,121,421
Effect of dilutive securities:
Restricted Stock Awards and LTIP Units (unvested)	—		—		—		—
Contingently Issued Shares and Units	—		—		—		—
Weighted average number of common shares - diluted	38,609,922		39,127,385		38,587,011		39,121,421

*Income (loss) allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units and Vested LTIP Units have been omitted from the denominator for the purpose of computing diluted earnings per share since 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) applicable to common shareholders.

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CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES

6 Months Ended

Jun. 30, 2020

Supplemental Cash Flow Elements [Abstract]

CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES

CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES

Interest paid during the six months ended June 30, 2020 and 2019 totaled $21,488 and $27,802 respectively. Net Cash paid on Interest Rate Derivative contracts during the six months ended June 30, 2020 and 2019 totaled $1,505 and $(2,443) respectively. Cash paid for income taxes during the six months ended June 30, 2020 and 2019 totaled $233 and $466, respectively. The following non-cash investing and financing activities occurred during the six months ended June 30, 2020 and 2019:

	2020		2019
Common Shares issued as part of the Dividend Reinvestment Plan	$	14	$	42
Issuance of share based payments	6,404		12,119
Accrued payables for capital expenditures placed into service	1,398		1,268
Adjustment to Record Noncontrolling Interest at Redemption Value	(3,196)		148
Adjustment to Record Right of Use Asset & Lease Liability	—		55,515

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019:

	2020		2019
Cash and cash equivalents	$	23,228	$	36,780
Escrowed cash	7,374		10,767
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	30,602	$	47,547

Amounts included in restricted cash represent those required to be set aside in escrow by contractual agreement with various lenders for the payment of specific items such as property insurance, property tax, and capital expenditures.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles Of Consolidation And Presentation

Principles of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with US GAAP and include all of our accounts as well as accounts of the Partnership, subsidiary partnerships and our wholly owned Taxable REIT Subsidiary Lessee (“TRS Lessee”), 44 New England Management Company. All significant inter-company amounts have been eliminated.

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.

Variable Interest Entities

Variable Interest Entities

We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. 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, there have been no changes to the operating structure of our legal entities during the six months ended June 30, 2020 and, therefore, there are no changes to our evaluation of VIE's as presented within our annual report presented on Form 10-K for the year ended December 31, 2019.

Noncontrolling Interest

Noncontrolling InterestWe classify the noncontrolling interests of our common units of limited partnership interest in HHLP (“Common Units”), and Long Term Incentive Plan Units (“LTIP Units”) as equity. LTIP Units are a separate class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances.

Revenue Recognition

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.

Identifiable assets, liabilities, and noncontrolling interests 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.

Properties intended to be sold are designated as “held for sale” on the balance sheet. In accordance with ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations, we evaluate each disposition to determine whether we need to classify the disposition as discontinued operations. This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.

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.

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

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 June 30, 2020, based on our analysis and given consideration to the impairment charge taken on one of our hotels held for sale, we have determined that the estimated future cash flow of each of the properties in our portfolio is sufficient to recover its carrying value.

New Accounting Pronouncements

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. As a result of identified structural risks of interbank offered rates, in particular, the London Interbank Offered Rate (LIBOR), reference rate reform is underway to identify alternative reference rates that are more observable or transaction based. The update provides guidance in accounting for changes in contracts, hedging relationships, and other transactions as a result of this reference rate reform. The optional expedients and exceptions contained within this update, in general, only apply to contract amendments and modifications entered into prior to January 1, 2023. The provisions of this update that will most likely affect our financial reporting process relate to modifications of contracts with lenders and the related hedging contracts associated with each respective modified borrowing contract. In general, the provisions of the update would benefit the Company by allowing, among other things, the following:

•Allowing modifications of debt contracts with lenders that fall under the guidance of ASC Topic 470 to be accounted for as a non-substantial modification and not be considered a debt extinguishment.

•Allowing a change to contractual terms of a hedging instrument in conjunction with reference rate reform to not require a dedesignation of the hedging relationship.

•Allowing a change to the interest rate used for margining, discounting, or contract price alignment for a derivative that is a cash flow hedge to not be considered a change to the critical terms of the hedge and will not require a dedesignation of the hedging relationship.

We have not entered into any contract modifications yet, as it directly relates to reference rate reform but we anticipate having to undertake such modifications in the future as a majority of our contracts with lenders and hedging counterparties are indexed to LIBOR. While we anticipate the impact of this update to be to the benefit of the Company, we are still evaluating the overall impact to the Company.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of preferred stock

Terms of the Series C, Series D, and Series E Preferred Shares outstanding at June 30, 2020 and December 31, 2019 are summarized as follows:

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]

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

NOTE 1 - BASIS OF PRESENTATION (CONTINUED)

							Dividend Per Share
	Shares Outstanding						Six Months Ended June 30,
Series	June 30, 2020	December 31, 2019	Aggregate Liquidation Preference		Distribution Rate		2020	2019
Series C	3,000,000	3,000,000	$	75,000	6.875	%	—	$	0.8594
Series D	7,701,700	7,701,700	$	192,500	6.500	%	—	$	0.8126
Series E	4,001,514	4,001,514	$	100,000	6.500	%	—	$	0.8126
Total	14,703,214	14,703,214

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INVESTMENT IN HOTEL PROPERTIES (Tables)

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of investment in hotel properties

Investment in hotel properties consists of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Land	$	505,156	$	518,243
Buildings and Improvements	1,686,057		1,710,621
Furniture, Fixtures and Equipment	297,465		294,527
Construction in Progress	4,706		10,202
	2,493,384		2,533,593
Less Accumulated Depreciation	(590,920)		(557,620)
Total Investment in Hotel Properties *	$	1,902,464	$	1,975,973

* The net book value of investment in hotel property at Ritz Coconut Grove, which is a variable interest entity, is $44,139 and $44,854 at June 30, 2020 and December 31, 2019, respectively.

Schedule of assets held for sale

The table below shows the balances for the properties that were classified as assets held for sales as of June 30, 2020.

	June 30, 2020
Land	$	13,087
Buildings and Improvements	35,482
Furniture, Fixtures and Equipment	6,418
	54,987
Less Accumulated Depreciation	(14,817)
Assets Held for Sale	$	40,170

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Tables)

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Schedule of investment in unconsolidated joint ventures

As of June 30, 2020 and December 31, 2019, our investment in unconsolidated joint ventures consisted of the following:

		Percent
Joint Venture	Hotel Properties	Owned		June 30, 2020		December 31, 2019
Cindat Hersha Owner JV, LLC	Hilton and IHG branded hotels in NYC	31	%	$	—	$	—
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50	%	555		1,434
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50	%	—		—
SB Partners Three, LLC	Home2 Suites, South Boston, MA	50	%	6,972		7,012
				$	7,527	$	8,446

Schedule of income or loss from unconsolidated joint ventures

Income (loss) recognized during the three and six months ended June 30, 2020 and 2019, for our investments in unconsolidated joint ventures is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cindat Hersha Owner JV, LLC	$	—	$	—	$	—	$	—
Hiren Boston, LLC	(477)		315		(880)		138
SB Partners, LLC	—		—		(600)		375
SB Partners Three, LLC	(25)		(16)		(40)		(33)
(Loss) Income from Unconsolidated Joint Venture Investments	$	(502)	$	299	$	(1,520)	$	480

Summary of financial information related to unconsolidated joint ventures

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 June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019.

Balance Sheets

	June 30, 2020		December 31, 2019
Assets
Investment in Hotel Properties, Net	$	584,038	$	579,287
Other Assets	28,359		33,891
Total Assets	$	612,397	$	613,178
Liabilities and Equity
Mortgages and Notes Payable	$	445,533	$	430,282
Other Liabilities	22,452		19,185
Equity:
Hersha Hospitality Trust	7,996		9,588
Joint Venture Partner(s)	136,977		154,998
Accumulated Other Comprehensive Loss	(561)		(875)
Total Equity	144,412		163,711
Total Liabilities and Equity	$	612,397	$	613,178

Statements of Operations

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Room Revenue	$	5,588	$	26,995	$	16,932	$	43,346
Other Revenue	—		622		787		1,243
Operating Expenses	(3,265)		(11,890)		(11,613)		(21,921)
Lease Expense	(170)		(164)		(354)		(365)
Property Taxes and Insurance	(3,154)		(3,051)		(6,438)		(6,103)
General and Administrative	(553)		(1,505)		(1,516)		(2,711)
Depreciation and Amortization	(3,925)		(3,694)		(7,840)		(7,354)
Interest Expense	(5,582)		(7,196)		(11,869)		(14,343)
Net (Loss) Income	$	(11,061)	$	117	$	(21,911)	$	(8,208)

Reconciliation of share in unconsolidated joint ventures equity in investment In unconsolidated joint ventures

The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of June 30, 2020 and December 31, 2019.

	June 30, 2020		December 31, 2019
Our share of equity recorded on the joint ventures' financial statements	$	7,996	$	9,588
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)	(469)		(1,142)
Investment in Unconsolidated Joint Ventures	$	7,527	$	8,446

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

•the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements;

•accumulated amortization of our equity in joint ventures that reflects the difference in our portion of the fair value of joint ventures' assets on the date of our investment when compared to the carrying value of the assets recorded on the joint ventures’ financial statements (this excess or deficit investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on our consolidated statement of operations); and

•cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements, if any.

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OTHER ASSETS (Tables)

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of other assets

Other Assets consisted of the following at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Derivative Asset	$	—	$	2,514
Deferred Financing Costs	3,019		1,330
Prepaid Expenses	6,189		11,279
Investment in Statutory Trusts	1,548		1,548
Investment in Non-Hotel Property and Inventories	2,714		2,987
Deposits with Unaffiliated Third Parties	2,575		2,577
Deferred Tax Asset, Net of Valuation Allowance of $20,363 and $497, respectively	—		11,390
Property Insurance Receivable	1,788		1,788
Other	3,163		2,764
	$	20,996	$	38,177

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DEBT (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of mortgages payable

Mortgages payable at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020		December 31, 2019
Mortgage Indebtedness	$	333,298	$	333,948
Net Unamortized Premium	585		821
Net Unamortized Deferred Financing Costs	(2,112)		(2,489)
Mortgages Payable	$	331,771	$	332,280

Summary of borrowing base assets

As of June 30, 2020, the following hotel properties secured the amended facilities under the Credit Agreements: 

- Courtyard, Brookline, MA	- Mystic Marriott Hotel & Spa, Groton, CT
- Holiday Inn Express, Cambridge, MA	- Hampton Inn, Washington, DC
- Envoy Hotel, Boston, MA	- Ritz Carlton, Washington, DC
- The Boxer, Boston, MA	- Hilton Garden Inn, M Street, Washington, DC
- Hampton Inn, Seaport, NY	- Residence Inn, Coconut Grove, FL
- The Duane Street Hotel, NY	- The Winter Haven, Miami, FL
- NU Hotel, Brooklyn, NY	- The Blue Moon, Miami, FL
- Holiday Inn Express, 29th Street, NY	- The Cadillac Hotel and Beach Club, Miami, FL
- The Gate JFK Airport, New York, NY	- The Parrot Key Hotel & Resort, Key West, FL
- Hilton Garden Inn, JFK Airport, New York, NY	- TownePlace Suites, Sunnyvale, CA
- Hyatt House White Plains, NY	- The Ambrose Hotel, Santa Monica, CA
- Sheraton, Wilmington South, DE	- Courtyard, San Diego, CA
- Hampton Inn, Philadelphia, PA	- The Pan Pacific Hotel, Seattle, WA
- The Rittenhouse, Philadelphia, PA	- The Westin, Philadelphia, PA

Summary of the balances outstanding and interest rate spread

The following table summarizes the balances outstanding and interest rate spread for each borrowing:

		Outstanding Balance
Borrowing	Spread	June 30, 2020		December 31, 2019
Line of Credit	1.50% to 2.25%	$	95,000	$	48,000
Term Loan:
First Term Loan	1.45% to 2.20%	$	207,000	$	207,000
Second Term Loan	1.35% to 2.00%	300,000		300,000
Third Term Loan	1.45% to 2.20%	193,900		193,900
Deferred Loan Costs		(3,303)		(3,717)
Total Term Loan		$	697,597	$	697,183

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LEASES (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Schedule of components of lease costs

The components of lease costs for the three months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	1,050	$	121	$	1,171	$	973	$	121	$	1,094
Variable lease costs	8		87		95		141		88		229
Total lease costs	$	1,058	$	208	$	1,266	$	1,114	$	209	$	1,323

The components of lease costs for the six months ended June 30, 2020 and 2019 were as follows:

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Ground Lease		Office Lease		Total		Ground Lease		Office Lease		Total
Operating lease costs	$	2,100	$	242	$	2,342	$	1,946	$	242	$	2,188
Variable lease costs	21		154		175		278		159		437
Total lease costs	$	2,121	$	396	$	2,517	$	2,224	$	401	$	2,625

Other information related to leases as of and for the six months ended June 30, 2020 and 2019 is as follows:

	June 30, 2020			June 30, 2019
Cash paid from operating cash flow for operating leases	$	1,951		$	2,188
Weighted average remaining lease term	64.2			64.2
Weighted average discount rate	7.86		%	7.85		%

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FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value of interest rate swaps and caps

The table on the following page presents our derivative instruments as of June 30, 2020 and December 31, 2019.

								Estimated Fair Value
								Asset / (Liability) Balance
Hedged Debt	Type	Strike Rate		Index	Effective Date	Derivative Contract Maturity Date	Notional Amount	June 30, 2020		December 31, 2019
Term Loan Instruments:
Credit Facility	Swap	1.341	%	1-Month LIBOR + 2.20%	October 3, 2019	August 2, 2021	150,000	(1,965)		539
Credit Facility	Swap	1.316	%	1-Month LIBOR + 2.20%	September 3, 2019	August 2, 2021	43,900	(563)		175
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.824	%	1-Month LIBOR + 2.20%	September 3, 2019	August 10, 2022	103,500	(3,698)		(718)
Credit Facility	Swap	1.460	%	1-Month LIBOR + 2.00%	September 10, 2019	September 10, 2024	300,000	(15,695)		1,776
Mortgages:
Courtyard, LA Westside, Culver City, CA	Swap	1.683	%	1-Month LIBOR + 2.75%	August 1, 2017	August 1, 2020	35,000	—		(8)
Annapolis Waterfront Hotel, MD	Cap	3.350	%	1-Month LIBOR +2.65%	May 1, 2018	May 1, 2021	28,000	—		—
Hyatt, Union Square, New York, NY	Swap	1.870	%	1-Month LIBOR + 2.30%	June 7, 2019	June 7, 2023	56,000	(2,827)		(556)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn Tribeca, New York, NY	Swap	1.768	%	1-Month LIBOR + 2.25%	July 25, 2019	July 25, 2024	22,725	(1,438)		(169)
Hilton Garden Inn 52nd Street, New York, NY	Swap	1.540	%	1-Month LIBOR + 2.30%	December 4, 2019	December 4, 2022	44,325	(1,515)		23
Courtyard, LA Westside, Culver City, CA	Swap	0.495	%	1-Month LIBOR + 2.75%	June 1, 2020	August 1, 2021	35,000	(134)		—
								$	(32,971)	$	175

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SHARE BASED PAYMENTS (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of unvested share awards issued to executives

A summary of our share based compensation activity from January 1, 2020 to June 30, 2020 is as follows:

	LTIP Unit Awards			Restricted Share Awards			Share Awards
	Number of Units	Weighted Average Grant Date Fair Value		Number of Restricted Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested Balance as of December 31, 2019	441,201	$	17.99	92,102	$	17.07	—
Granted	1,101,924	5.23		135,740	5.21		—	N/A
Vested	(120,459)	5.23		(75,384)	12.74		—	N/A
Forfeited	—	N/A		(113)	18.00		—	N/A
Unvested Balance as of June 30, 2020	1,422,666	$	9.19	152,345	$	8.65	—

Schedule of employee service share-based compensation, allocation of recognized period costs

The following table summarizes share based compensation expense for the three and six months ended June 30, 2020 and 2019 and unearned compensation as of June 30, 2020 and December 31, 2019:

	Share Based Compensation Expense								Unearned Compensation
	For the Three Months Ended				For the Six Months Ended				As of
	6/30/2020		6/30/2019		6/30/2020		6/30/2019		6/30/2020		12/31/2019
Issued Awards
LTIP Unit Awards	$	1,142	$	1,428	$	2,951	$	2,791	$	4,179	$	2,878
Restricted Share Awards	342		459		674		795		1,080		1,051
Share Awards	—		402		—		402		—		—
Unissued Awards
Market Based	315		430		630		689		2,110		2,739
Performance Based	—		755		—		755		—		—
Total	$	1,799	$	3,474	$	4,255	$	5,432	$	7,369	$	6,668

Disclosure of share-based compensation arrangements by share-based payment award

The remaining unvested target units are expected to vest as follows:

	2020	2021	2022	2023
LTIP Unit Awards	524,540	898,126	—	—
Restricted Share Awards	3,784	144,376	3,654	531
	528,324	1,042,502	3,654	531

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Reconciliation of 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.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
NUMERATOR:
Basic and Diluted*
Net (Loss) Income	$	(71,780)	$	5,559	$	(97,752)	$	(2,323)
Loss allocated to Noncontrolling Interests	10,360		41		13,257		1,264
Distributions to Preferred Shareholders	(6,044)		(6,043)		(12,088)		(12,087)
Dividends Paid on Unvested Restricted Shares and LTIP Units	—		(271)		—		(553)
Net Loss applicable to Common Shareholders	$	(67,464)	$	(714)	$	(96,583)	$	(13,699)
DENOMINATOR:
Weighted average number of common shares - basic	38,609,922		39,127,385		38,587,011		39,121,421
Effect of dilutive securities:
Restricted Stock Awards and LTIP Units (unvested)	—		—		—		—
Contingently Issued Shares and Units	—		—		—		—
Weighted average number of common shares - diluted	38,609,922		39,127,385		38,587,011		39,121,421

*Income (loss) allocated to noncontrolling interest in HHLP has been excluded from the numerator and Common Units and Vested LTIP Units have been omitted from the denominator for the purpose of computing diluted earnings per share since 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) applicable to common shareholders.

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CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2020

Supplemental Cash Flow Elements [Abstract]

Schedule of cash flow

The following non-cash investing and financing activities occurred during the six months ended June 30, 2020 and 2019:

	2020		2019
Common Shares issued as part of the Dividend Reinvestment Plan	$	14	$	42
Issuance of share based payments	6,404		12,119
Accrued payables for capital expenditures placed into service	1,398		1,268
Adjustment to Record Noncontrolling Interest at Redemption Value	(3,196)		148
Adjustment to Record Right of Use Asset & Lease Liability	—		55,515

Schedule of cash and cash equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019:

	2020		2019
Cash and cash equivalents	$	23,228	$	36,780
Escrowed cash	7,374		10,767
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	30,602	$	47,547

Summary of restrictions on cash and cash equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019:

	2020		2019
Cash and cash equivalents	$	23,228	$	36,780
Escrowed cash	7,374		10,767
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	30,602	$	47,547

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BASIS OF PRESENTATION (Narrative) (Details) - USD ($)	1 Months Ended		3 Months Ended			6 Months Ended
	Jul. 31, 2020	Apr. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Apr. 02, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Noncontrolling Interest [Abstract]
Loss attributable to noncontrolling interest				$ 0	$ 0	$ 0	$ 300,000
Adjustment to Record Noncontrolling Interest at Redemption Value						(3,196,000)
Equity in noncontrolling interest			$ 751,051,000			751,051,000			$ 871,801,000
Proceed from line of credit						$ 47,000,000	27,000,000
Buildings and Improvements | Maximum
Noncontrolling Interest [Abstract]
Useful life of buildings and improvements						40 years
Furniture, Fixtures and Equipment | Minimum
Noncontrolling Interest [Abstract]
Useful life of buildings and improvements						2 years
Furniture, Fixtures and Equipment | Maximum
Noncontrolling Interest [Abstract]
Useful life of buildings and improvements						7 years
Revolving Line Of Credit
Noncontrolling Interest [Abstract]
Revolving line of credit, increase (decrease) In borrowing capacity								$ 100,000,000
Proceed from line of credit		$ 25,000,000
Secured Debt | Debt Instrument Secured By One Mortgage
Noncontrolling Interest [Abstract]
Short term debt outstanding			25,000,000			$ 25,000,000
Subsequent Event | Revolving Line Of Credit
Noncontrolling Interest [Abstract]
Proceed from line of credit	$ 10,000,000
Noncontrolling Interests Common Units And LTIP Units
Noncontrolling Interest [Abstract]
Noncontrolling interests in Nonredeemable Common Units			$ 55,715,000			$ 55,715,000			64,144,000
Nonredeemable common units outstanding (in shares)			5,381,870			5,381,870
Fair market value of nonredeemable common units			$ 31,000,000			$ 31,000,000
Equity in noncontrolling interest			55,715,000	59,162,000	64,574,000	55,715,000	64,574,000		64,144,000	$ 64,808,000	$ 62,010,000
Consolidated Joint Ventures
Noncontrolling Interest [Abstract]
Adjustment to Record Noncontrolling Interest at Redemption Value			(3,196,000)		8,000		148,000
Equity in noncontrolling interest			0	3,196,000	2,856,000	0	2,856,000		3,196,000	2,848,000	2,708,000
Additional Paid-In Capital
Noncontrolling Interest [Abstract]
Adjustment to Record Noncontrolling Interest at Redemption Value			3,196,000		(8,000)	3,196,000	(148,000)
Equity in noncontrolling interest			$ 1,149,291,000	$ 1,145,450,000	$ 1,152,939,000	$ 1,149,291,000	$ 1,152,939,000		$ 1,144,808,000	$ 1,151,654,000	$ 1,155,776,000
Senior Common Equity Interest
Noncontrolling Interest [Abstract]
Noncontrolling interest, common equity interest, return						12.00%
Consolidated Joint Ventures
Noncontrolling Interest [Abstract]
Cumulative return on common equity interest (percent)			30.00%			30.00%
Consolidated Joint Ventures | Senior Common Equity Interest
Noncontrolling Interest [Abstract]
Cumulative return on common equity interest (percent)			25.00%			25.00%
Consolidated Joint Ventures | Junior Common Equity Interest | Scenario, Plan
Noncontrolling Interest [Abstract]
Noncontrolling interest, common equity interest, return						8.00%
Hersha Holding RC Owner, LLC
Noncontrolling Interest [Abstract]
Cumulative return on common equity interest (percent)			70.00%			70.00%
Hersha Holding RC Owner, LLC | Senior Common Equity Interest
Noncontrolling Interest [Abstract]
Noncontrolling interest, common equity interest, return						8.00%
Cumulative return on common equity interest (percent)			75.00%			75.00%
Ritz-Carlton Coconut Grove, FL | Consolidated Joint Ventures
Noncontrolling Interest [Abstract]
Noncontrolling interest, ownership percentage			15.00%			15.00%
Hersha Hospitality Limited Partnership
Class of Stock
Approximate ownership percentage in the partnership (percent)			87.80%			87.80%
General partnership interest (percent)						1.00%

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BASIS OF PRESENTATION (Schedule Of Preferred Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Class of Stock
Shares outstanding (in shares)	14,703,214		14,703,214
Series C Preferred Shares
Class of Stock
Shares outstanding (in shares)	3,000,000		3,000,000
Aggregate Liquidation Preference	$ 75,000
Dividend Rate (percentage)	6.875%
Dividend per share (in dollars per share)	$ 0	$ 0.8594
Series D Preferred Shares
Class of Stock
Shares outstanding (in shares)	7,701,700		7,701,700
Aggregate Liquidation Preference	$ 192,500
Dividend Rate (percentage)	6.50%
Dividend per share (in dollars per share)	$ 0	0.8126
Series E Preferred Shares
Class of Stock
Shares outstanding (in shares)	4,001,514		4,001,514
Aggregate Liquidation Preference	$ 100,000
Dividend Rate (percentage)	6.50%
Dividend per share (in dollars per share)	$ 0	$ 0.8126

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INVESTMENT IN HOTEL PROPERTIES (Investment In Hotel Properties) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment
Total investment in hotel properties, gross	$ 2,493,384	$ 2,533,593
Less Accumulated Depreciation	(590,920)	(557,620)
Total Investment in Hotel Properties	1,902,464	1,975,973
Assets	2,054,560	2,122,428
Variable Interest Entity, Primary Beneficiary
Property, Plant and Equipment
Assets	44,139	44,854
Land
Property, Plant and Equipment
Total investment in hotel properties, gross	505,156	518,243
Buildings and Improvements
Property, Plant and Equipment
Total investment in hotel properties, gross	1,686,057	1,710,621
Furniture, Fixtures and Equipment
Property, Plant and Equipment
Total investment in hotel properties, gross	297,465	294,527
Construction in Progress
Property, Plant and Equipment
Total investment in hotel properties, gross	$ 4,706	$ 10,202

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INVESTMENT IN HOTEL PROPERTIES (Assets Held For Sale) (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Long Lived Assets Held-for-sale
Less Accumulated Depreciation	$ (14,817)
Assets Held for Sale	40,170
Assets Held-for-sale
Long Lived Assets Held-for-sale
Assets Held for Sale, gross	54,987
Land | Assets Held-for-sale
Long Lived Assets Held-for-sale
Assets Held for Sale, gross	13,087
Buildings and Improvements | Assets Held-for-sale
Long Lived Assets Held-for-sale
Assets Held for Sale, gross	35,482
Furniture, Fixtures and Equipment | Assets Held-for-sale
Long Lived Assets Held-for-sale
Assets Held for Sale, gross	$ 6,418

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INVESTMENT IN HOTEL PROPERTIES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment
Asset impairment charge	$ 1,069	$ 0	$ 1,069	$ 0
Duane Street Hotel
Property, Plant and Equipment
Reduction in purchase price	$ 2

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Investment In Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Investments in Unconsolidated Joint Ventures
Investment in unconsolidated joint ventures	$ 7,527	$ 8,446
Hilton and IHG branded hotels in NYC | Cindat Hersha Owner JV, LLC
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)	31.00%
Investment in unconsolidated joint ventures	$ 0	0
Courtyard by Marriott, South Boston, MA | Hiren Boston, LLC
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)	50.00%
Investment in unconsolidated joint ventures	$ 555	1,434
Holiday Inn Express, South Boston, MA | SB Partners, LLC
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)	50.00%
Investment in unconsolidated joint ventures	$ 0	0
Home2 Suites, South Boston, MA | SB Partners Three, LLC
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)	50.00%
Investment in unconsolidated joint ventures	$ 6,972	$ 7,012

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Investments in Unconsolidated Joint Ventures
Investment in Unconsolidated Joint Ventures		$ 7,527	$ 8,446
Cindat Hersha Owner JV, LLC | Cindat Capital Management Limited
Investments in Unconsolidated Joint Ventures
Preferred joint venture partner, ownership (percentage)		69.00%
Cindat Hersha Owner JV, LLC | Cindat Capital Management Limited | Senior Common Equity Interest
Investments in Unconsolidated Joint Ventures
Common equity interest		$ 143,650
Cindat Hersha Owner JV, LLC | Cindat Capital Management Limited | Junior Common Equity Interest
Investments in Unconsolidated Joint Ventures
Common equity interest return (percentage)		8.00%
Cindat Hersha Owner JV, LLC | Hersha Hospitality Limited Partnership
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)		31.00%
Cindat Hersha Owner JV, LLC | Hersha Hospitality Limited Partnership | Junior Common Equity Interest
Investments in Unconsolidated Joint Ventures
Common equity interest		$ 64,357
Hilton and IHG branded hotels in NYC | Cindat Hersha Owner JV, LLC
Investments in Unconsolidated Joint Ventures
Percent owned (percentage)		31.00%
Investment in Unconsolidated Joint Ventures		$ 0	$ 0
Scenario, Plan | Cindat Hersha Owner JV, LLC | Cindat Capital Management Limited
Investments in Unconsolidated Joint Ventures
Common equity interest return (percentage)		8.00%
Common equity interest, return, annual reduction (percentage)		0.50%
Common equity interest, return, annual reduction, term		4 years
Subsequent Event | Forecast
Investments in Unconsolidated Joint Ventures
Net proceeds from the sale of our interests	$ 26

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Income Or Loss From Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Investments in Unconsolidated Joint Ventures
Income (loss) from equity method investments	$ (502)	$ 299	$ (1,520)	$ 480
Cindat Hersha Owner JV, LLC
Investments in Unconsolidated Joint Ventures
Income (loss) from equity method investments	0	0	0	0
Hiren Boston, LLC
Investments in Unconsolidated Joint Ventures
Income (loss) from equity method investments	(477)	315	(880)	138
SB Partners, LLC
Investments in Unconsolidated Joint Ventures
Income (loss) from equity method investments	0	0	(600)	375
SB Partners Three, LLC
Investments in Unconsolidated Joint Ventures
Income (loss) from equity method investments	$ (25)	$ (16)	$ (40)	$ (33)

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Summary Financial Information Related To Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Assets
Investment in Hotel Properties, Net	$ 1,902,464		$ 1,902,464		$ 1,975,973
Other Assets	20,996		20,996		38,177
Total Assets	2,054,560		2,054,560		2,122,428
Liabilities and Equity
Mortgages and Notes Payable	331,771		331,771		332,280
Equity:
Hersha Hospitality Trust	695,336		695,336		807,657
Joint Venture Partner(s)	55,715		55,715		64,144
Accumulated Other Comprehensive Loss	(27,097)		(27,097)		1,010
Liabilities and Equity	2,054,560		2,054,560		2,122,428
Statement of Operations [Abstract]
Other Revenue	29	$ (12)	228	$ 138
Lease Expense	(1,266)	(1,323)	(2,517)	(2,625)
Property Taxes and Insurance	(9,969)	(8,997)	(19,911)	(18,394)
General and Administrative	(4,187)	(8,100)	(10,021)	(13,700)
Depreciation and Amortization	(24,322)	(23,964)	(48,510)	(48,092)
Interest Expense	(13,481)	(13,325)	(26,488)	(26,223)
Net (Loss) Income	(71,780)	5,559	(97,752)	(2,323)
Room
Statement of Operations [Abstract]
Hotel Operating Revenues:	15,139	118,980	86,222	210,465
Operating Expenses	(3,622)	(24,013)	(22,714)	(46,103)
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Assets
Investment in Hotel Properties, Net	584,038		584,038		579,287
Other Assets	28,359		28,359		33,891
Total Assets	612,397		612,397		613,178
Liabilities and Equity
Mortgages and Notes Payable	445,533		445,533		430,282
Other Liabilities	22,452		22,452		19,185
Equity:
Hersha Hospitality Trust	7,996		7,996		9,588
Joint Venture Partner(s)	136,977		136,977		154,998
Accumulated Other Comprehensive Loss	(561)		(561)		(875)
Total Equity	144,412		144,412		163,711
Liabilities and Equity	612,397		612,397		$ 613,178
Statement of Operations [Abstract]
Other Revenue	0	622	787	1,243
Operating Expenses	(3,265)	(11,890)	(11,613)	(21,921)
Lease Expense	(170)	(164)	(354)	(365)
Property Taxes and Insurance	(3,154)	(3,051)	(6,438)	(6,103)
General and Administrative	(553)	(1,505)	(1,516)	(2,711)
Depreciation and Amortization	(3,925)	(3,694)	(7,840)	(7,354)
Interest Expense	(5,582)	(7,196)	(11,869)	(14,343)
Net (Loss) Income	(11,061)	117	(21,911)	(8,208)
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Room
Statement of Operations [Abstract]
Hotel Operating Revenues:	$ 5,588	$ 26,995	$ 16,932	$ 43,346

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Reconciliation Of Share In Unconsolidated Joint Ventures' Equity In Investment In Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Equity Method Investments and Joint Ventures [Abstract]
Our share of equity recorded on the joint ventures' financial statements	$ 7,996	$ 9,588
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures	(469)	(1,142)
Investment in Unconsolidated Joint Ventures	$ 7,527	$ 8,446

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OTHER ASSETS (Other Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Derivative Asset	$ 0	$ 2,514
Deferred Financing Costs	3,019	1,330
Prepaid Expenses	6,189	11,279
Investment in Statutory Trusts	1,548	1,548
Investment in Non-Hotel Property and Inventories	2,714	2,987
Deposits with Unaffiliated Third Parties	2,575	2,577
Deferred Tax Asset, Net of Valuation Allowance of $20,363 and $497, respectively	0	11,390
Property Insurance Receivable	1,788	1,788
Other	3,163	2,764
Total other assets	20,996	38,177
Deferred tax assets, valuation allowance	$ 20,363	$ 497

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OTHER ASSETS (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred tax assets, net	$ 0	$ 11,390

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DEBT (Mortgages) (Details) - Mortgages - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Mortgages and Notes Payable [Abstract]
Mortgage Indebtedness	$ 333,298		$ 333,298		$ 333,948
Net Unamortized Premium	585		585		821
Net Unamortized Deferred Financing Costs	(2,112)		(2,112)		(2,489)
Total debt	331,771		331,771		$ 332,280
Interest expense	3,031	$ 4,077	$ 6,516	$ 8,067
Debt covenant compliance status			We have determined that all debt covenants contained in the loan agreements securing our consolidated hotel properties with the exception of one mortgage were met as of June 30, 2020.
Interest Rate Swap
Mortgages and Notes Payable [Abstract]
Increase (decrease) interest expense	$ 552	$ (99)	$ 585	$ (196)
Minimum
Mortgages and Notes Payable [Abstract]
Debt instrument, interest rate, effective (percentage)	2.16%		2.16%
Maximum
Mortgages and Notes Payable [Abstract]
Debt instrument, interest rate, effective (percentage)	6.30%		6.30%

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DEBT (Unsecured Notes Payable) (Details) - Junior Subordinated Debt $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Hersha Statutory Trust I and Hersha Statutory Trust II
Subordinated Notes Payable
Number of debt instruments | loan	2		2
Subordinated notes payable	$ 51,548		$ 51,548
Maturity date			Jul. 30, 2035
Number of business days prior to quarterly interest payments for resetting rates			2 days
Net unamortized deferred financing costs	$ 785		$ 785		$ 812
Debt instrument, interest rate during period (in hundredths)	4.08%	5.64%	4.45%	5.66%
Interest expense	$ 532	$ 734	$ 1,160	$ 1,466
Hersha Statutory Trust I
Subordinated Notes Payable
Subordinated notes payable	25,774		$ 25,774
Debt instrument, description of variable rate basis			LIBOR
Basis spread on variable rate (percentage)			3.00%
Hersha Statutory Trust II
Subordinated Notes Payable
Subordinated notes payable	$ 25,774		$ 25,774
Debt instrument, description of variable rate basis			LIBOR
Basis spread on variable rate (percentage)			3.00%

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DEBT (Credit Facilities Narrative) (Details)		1 Months Ended		3 Months Ended		6 Months Ended
	Apr. 02, 2020 USD ($)	Jul. 31, 2020 USD ($)	Apr. 30, 2020 USD ($)	Jun. 30, 2020 USD ($) agreement	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) agreement	Jun. 30, 2019 USD ($)
Short-term Debt
Proceed from line of credit						$ 47,000,000	$ 27,000,000
Line of credit facility covenant minimum tangible net worth	$ 1,119,500,000
Line of credit facility covenant percentage of net cash proceeds of issuance and sales of equity interests (percentage)	75.00%
Line of credit facility covenant maximum annual distributions ( (percentage)	95.00%
Line of credit facility covenant maximum leverage ratio (percentage)	60.00%
Line of credit facility covenant maximum secured debt leverage ratio (percentage)	45.00%
Minimum
Short-term Debt
Line of credit facility covenant fixed charge coverage ratio	1.50
Term Loan:
Short-term Debt
Number of unsecured credit agreements (agreements) | agreement				3		3
Debt instrument, face amount				$ 950,900,000		$ 950,900,000
Term Loan: | Credit Facility
Short-term Debt
Revolving line of credit, current borrowing capacity				457,000,000		457,000,000
Line of credit, maximum borrowing capacity				857,000,000		857,000,000
Revolving line of credit, increase (decrease) In borrowing capacity	$ 100,000,000
Proceed from line of credit			$ 25,000,000
Term Loan: | $250 Million Term Loan (First Term Loan)
Short-term Debt
Debt instrument, face amount				207,000,000		$ 207,000,000
Line of credit, expiration date						Aug. 10, 2022
Term Loan: | $300 Million Senior Term Loan Agreement (Second Term Loan)
Short-term Debt
Debt instrument, face amount				300,000,000		$ 300,000,000
Maturity date						Sep. 10, 2024
Term Loan: | $200 Million Senior Term Loan Agreement (Third Term Loan)
Short-term Debt
Debt instrument, face amount				193,900,000		$ 193,900,000
Maturity date						Aug. 02, 2021
Revolving Line Of Credit
Short-term Debt
Revolving line of credit, increase (decrease) In borrowing capacity	$ 100,000,000
Proceed from line of credit			$ 25,000,000
Description of variable rate basis						one month U.S. LIBOR
Interest expense, on credit facilities				$ 5,370,000	$ 8,903,000	$ 12,404,000	$ 17,539,000
Line of credit, weighted average interest rate (percentage)				4.23%	4.17%	4.21%	4.15%
Revolving Line Of Credit | Subsequent Event
Short-term Debt
Proceed from line of credit		$ 10,000,000
Revolving Line Of Credit | Interest Rate Swap
Short-term Debt
Increase (decrease) interest expense				$ 3,133,000	$ (1,000,000)	$ 4,219,000	$ (2,095,000)
Revolving Line Of Credit | $250 Million Senior Revolving Line Of Credit (Line of Credit)
Short-term Debt
Revolving line of credit, current borrowing capacity				$ 250,000,000		$ 250,000,000

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DEBT (Summary Of The Balances Outstanding And Interest Rate Spread) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Short-term Debt
Line of Credit	$ 95,000	$ 48,000
Term Loan:
Short-term Debt
Deferred Loan Costs	(3,303)	(3,717)
Total debt	697,597	697,183
$250 Million Senior Revolving Line Of Credit (Line of Credit) | Line of Credit
Short-term Debt
Line of Credit	95,000	48,000
$250 Million Term Loan (First Term Loan) | Term Loan:
Short-term Debt
Unsecured Term Loan	207,000	207,000
$300 Million Senior Term Loan Agreement (Second Term Loan) | Term Loan:
Short-term Debt
Unsecured Term Loan	300,000	300,000
$200 Million Senior Term Loan Agreement (Third Term Loan) | Term Loan:
Short-term Debt
Unsecured Term Loan	$ 193,900	$ 193,900
Minimum | $250 Million Senior Revolving Line Of Credit (Line of Credit) | Line of Credit
Short-term Debt
Basis spread on variable rate (percentage)	1.50%
Minimum | $250 Million Term Loan (First Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	1.45%
Minimum | $300 Million Senior Term Loan Agreement (Second Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	1.35%
Minimum | $200 Million Senior Term Loan Agreement (Third Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	1.45%
Maximum | $250 Million Senior Revolving Line Of Credit (Line of Credit) | Line of Credit
Short-term Debt
Basis spread on variable rate (percentage)	2.25%
Maximum | $250 Million Term Loan (First Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	2.20%
Maximum | $300 Million Senior Term Loan Agreement (Second Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	2.00%
Maximum | $200 Million Senior Term Loan Agreement (Third Term Loan) | Term Loan:
Short-term Debt
Basis spread on variable rate (percentage)	2.20%

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DEBT (Paycheck Protection Program Loans) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Debt Disclosure [Abstract]
Proceeds of Paycheck Protection Program ("PPP") Loans	$ 18,936	$ 0

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DEBT (Capitalized Interest and Deferred Financing Costs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Debt Disclosure [Abstract]
Amortization of deferred costs	$ 702	$ 560	$ 1,267	$ 1,134

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DEBT (New Debt/Refinance Narrative) (Details)	Apr. 02, 2020 USD ($)
Revolving Line Of Credit
Debt Instrument [Line Items]
Revolving line of credit, increase (decrease) In borrowing capacity	$ 100,000,000

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LEASES (Narrative) (Details) $ in Thousands	Jun. 30, 2020 USD ($) lease property	Dec. 31, 2019 USD ($)	Jan. 01, 2019 USD ($)
Lessee, Lease, Description
Right of use asset	$ 44,761	$ 45,384	$ 55,515
Lease liability	$ 54,217	$ 54,548	$ 55,515
Land
Lessee, Lease, Description
Number of real estate properties (property) | property	5
Building
Lessee, Lease, Description
Number of lease agreements | lease	2

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LEASES (Lease Costs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Lessee, Lease, Description
Operating lease costs	$ 1,171	$ 1,094	$ 2,342	$ 2,188
Variable lease costs	95	229	175	437
Total lease costs	1,266	1,323	2,517	2,625
Ground Lease
Lessee, Lease, Description
Operating lease costs	1,050	973	2,100	1,946
Variable lease costs	8	141	21	278
Total lease costs	1,058	1,114	2,121	2,224
Office Lease
Lessee, Lease, Description
Operating lease costs	121	121	242	242
Variable lease costs	87	88	154	159
Total lease costs	$ 208	$ 209	$ 396	$ 401

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LEASES (Other Information) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Cash paid from operating cash flow for operating leases	$ 1,951	$ 2,188
Weighted average remaining lease term	64 years 2 months 12 days	64 years 2 months 12 days
Weighted average discount rate (in percent)	7.86%	7.85%

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COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) property	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) property	Jun. 30, 2019 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Management Agreements
Term of management agreements with HHMLP (in years)			5 years
Base management fee as percentage of gross revenues (percentage)			3.00%
Base management fees incurred	$ 564,000	$ 3,949,000	$ 2,933,000	$ 6,942,000
Incentive management fees incurred	0	0	0	0
Accounting and Information Technology Fees
Accounting fees	319,000	315,000	644,000	631,000
Information technology fees	103,000	102,000	$ 208,000	203,000
Capital Expenditure Fees
Fee on all capital expenditures and pending renovation projects at the properties (percentage)			5.00%
Fees incurred on capital expenditures	56,000	989,000	$ 956,000	1,513,000
Acquisitions From Affiliates
Period of right of first refusal per option agreement with officers and affiliated trustees after termination			1 year
Hotel Supplies
Hotel supplies	11,000	80,000	$ 63,000	214,000
Charges for capital expenditure purchases	176,000	3,882,000	1,056,000	4,417,000
Capital expenditures included in accounts payable	26,000		26,000			$ 9,000
Lessee Disclosure
Rent forgiven					$ 103,000
Due from Related Parties, Unclassified
Due from related parties	2,363,000		2,363,000			6,113,000
Due to Related Parties
Due to related parties	$ 0		$ 0			$ 0
Hotel
Lessee Disclosure
Number of real estate properties (property) | property	3		3
Minimum
Franchise Agreements
Terms of franchise agreements (in years)			10 years
Accounting and Information Technology Fees
Monthly fees for accounting services per property for hotels managed by HHMLP			$ 2,000
Monthly information technology fees per property for hotels managed by HHMLP, minimum			$ 1,000
Maximum
Franchise Agreements
Terms of franchise agreements (in years)			20 years
Accounting and Information Technology Fees
Monthly fees for accounting services per property for hotels managed by HHMLP			$ 3,000
Monthly information technology fees per property for hotels managed by HHMLP, minimum			2,000
Executive Officer
Hotel Supplies
Related party transaction, purchases from related party	$ 1,388,000	1,269,000	$ 2,984,000	2,706,000
Lessee Disclosure
Ownership percentage in related party (in percentage)	70.00%		70.00%
Revenue from related parties			$ 0	143,000
Lease Agreements | Executive Officer
Lessee Disclosure
Term of lease (in years)	5 years		5 years
Franchise
Franchise Agreements
Franchise fee expense	$ 775,000	$ 6,508,000	$ 4,603,000	$ 11,483,000

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FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Fair Value Of Interest Rate Swaps And Caps) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 01, 2020	Dec. 31, 2019
Derivatives, Fair Value
Estimated Fair Value	$ (32,971)		$ 175
Interest Rate Swap | Credit Facility October 3, 2019
Derivatives, Fair Value
Strike Rate	1.341%
Index	2.20%
Effective Date	Oct. 03, 2019
Derivative Contract Maturity Date	Aug. 02, 2021
Notional Amount	$ 150,000
Estimated Fair Value	$ (1,965)		539
Interest Rate Swap | Credit Facility September 10, 2019
Derivatives, Fair Value
Strike Rate	1.46%
Index	2.00%
Effective Date	Sep. 10, 2019
Derivative Contract Maturity Date	Sep. 10, 2024
Notional Amount	$ 300,000
Estimated Fair Value	$ (15,695)		1,776
Interest Rate Swap | Courtyard, LA Westside, Culver City, CA
Derivatives, Fair Value
Strike Rate	0.495%
Index	2.75%
Effective Date	Jun. 01, 2020
Derivative Contract Maturity Date	Aug. 01, 2021
Notional Amount	$ 35,000	$ 35,000
Estimated Fair Value	$ (134)		0
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY
Derivatives, Fair Value
Strike Rate	1.768%
Index	2.25%
Effective Date	Jul. 25, 2019
Derivative Contract Maturity Date	Jul. 25, 2024
Notional Amount	$ 22,725
Estimated Fair Value	$ (1,438)		(169)
Interest Rate Swap | Hilton Garden Inn 52nd Street, New York, NY
Derivatives, Fair Value
Strike Rate	1.54%
Index	2.30%
Effective Date	Dec. 04, 2019
Derivative Contract Maturity Date	Dec. 04, 2022
Notional Amount	$ 44,325
Estimated Fair Value	$ (1,515)		23
Interest Rate Swap | Credit Facility September 3, 2019
Derivatives, Fair Value
Strike Rate	1.316%
Index	2.20%
Effective Date	Sep. 03, 2019
Derivative Contract Maturity Date	Aug. 02, 2021
Notional Amount	$ 43,900
Estimated Fair Value	$ (563)		175
Interest Rate Swap | Courtyard, LA Westside, Culver City, CA
Derivatives, Fair Value
Strike Rate	1.683%
Index	2.75%
Effective Date	Aug. 01, 2017
Derivative Contract Maturity Date	Aug. 01, 2020
Notional Amount	$ 35,000	$ 35,000
Estimated Fair Value	$ 0		(8)
Interest Rate Swap | Hyatt Union Square, New York, NY
Derivatives, Fair Value
Strike Rate	1.87%
Index	2.30%
Effective Date	Jun. 07, 2019
Derivative Contract Maturity Date	Jun. 07, 2023
Notional Amount	$ 56,000
Estimated Fair Value	$ (2,827)		(556)
Interest Rate Swap | Hilton Garden Inn Tribeca, New York, NY
Derivatives, Fair Value
Strike Rate	1.768%
Index	2.25%
Effective Date	Jul. 25, 2019
Derivative Contract Maturity Date	Jul. 25, 2024
Notional Amount	$ 22,725
Estimated Fair Value	$ (1,438)		(169)
Interest Rate Swap | Credit Facility September 3, 2019
Derivatives, Fair Value
Strike Rate	1.824%
Index	2.20%
Effective Date	Sep. 03, 2019
Derivative Contract Maturity Date	Aug. 10, 2022
Notional Amount	$ 103,500
Estimated Fair Value	$ (3,698)		(718)
Interest Rate Swap | Credit Facility September 3, 2019
Derivatives, Fair Value
Strike Rate	1.824%
Index	2.20%
Effective Date	Sep. 03, 2019
Derivative Contract Maturity Date	Aug. 10, 2022
Notional Amount	$ 103,500
Estimated Fair Value	$ (3,698)		(718)
Interest Rate Cap | Annapolis Waterfront Hotel, MD
Derivatives, Fair Value
Strike Rate	3.35%
Index	2.65%
Effective Date	May 01, 2018
Derivative Contract Maturity Date	May 01, 2021
Notional Amount	$ 28,000
Estimated Fair Value	$ 0		$ 0

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FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Derivatives, Fair Value
Loss on fair value of derivative instruments	$ (792)	$ (5,234)	$ (30,941)	$ (8,155)
Unrealized gain (loss) reclassified from accumulated other comprehensive income to interest expense	1,228	$ 1,112	2,205	$ 2,253
Loss to be reclassified to interest expense during next 12 months	14,197		14,197
Old Swap
Derivatives, Fair Value
Fair value of old swap	67		67
Carrying (Reported) Amount, Fair Value Disclosure
Derivatives, Fair Value
Carrying value and estimated fair value of debt	1,175,131		1,175,131		$ 1,128,199
Estimate of Fair Value, Fair Value Disclosure
Derivatives, Fair Value
Carrying value and estimated fair value of debt	$ 1,150,217		$ 1,150,217		$ 1,098,082

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SHARE BASED PAYMENTS (Narrative) (Details) - $ / shares			6 Months Ended
	Apr. 13, 2020	Apr. 10, 2020	Jun. 30, 2020
LTIP Unit Awards
Share-based Compensation Arrangement by Share-based Payment Award
Granted (in shares)			1,101,924
Share price (in dollar per share)		$ 3.58
Compensation cost not yet recognized, period for recognition (in years)			1 year 6 months
Restricted Share Awards
Share-based Compensation Arrangement by Share-based Payment Award
Granted (in shares)			135,740
Compensation cost not yet recognized, period for recognition (in years)			10 months 24 days
Short Term Incentive Program | LTIP Unit Awards
Share-based Compensation Arrangement by Share-based Payment Award
Granted (in shares)		833,539
Vesting period (in years)		2 years
Multi-Year EIP | LTIP Unit Awards
Share-based Compensation Arrangement by Share-based Payment Award
Granted (in shares)	240,923
Vesting period (in years)	3 years
Multi-Year EIP | LTIP Unit Awards | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award
Vesting schedule (percentage)	50.00%
Multi-Year EIP | LTIP Unit Awards | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award
Vesting schedule (percentage)	50.00%

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SHARE BASED PAYMENTS (Summary Of Share Based Compensation Activity) (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares shares
LTIP Unit Awards
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Unvested balance, beginning of the period (in shares)	441,201
Granted (in shares)	1,101,924
Vested (in shares)	(120,459)
Forfeited (in shares)	0
Unvested balance, end of the period (in shares)	1,422,666
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Weighted average grant date fair value, unvested balance at the beginning of the period (in dollars per share) | $ / shares	$ 17.99
Weighted average grant date fair value, unvested balance, granted (in dollars per share) | $ / shares	5.23
Weighted average grant date fair value, unvested balance, vested (in dollars per share) | $ / shares	5.23
Weighted average grant date fair value, unvested balance at the end of the period (in dollars per share) | $ / shares	$ 9.19
Restricted Share Awards
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Unvested balance, beginning of the period (in shares)	92,102
Granted (in shares)	135,740
Vested (in shares)	(75,384)
Forfeited (in shares)	(113)
Unvested balance, end of the period (in shares)	152,345
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Weighted average grant date fair value, unvested balance at the beginning of the period (in dollars per share) | $ / shares	$ 17.07
Weighted average grant date fair value, unvested balance, granted (in dollars per share) | $ / shares	5.21
Weighted average grant date fair value, unvested balance, vested (in dollars per share) | $ / shares	12.74
Weighted average grant date fair value, unvested balance, forefeited (in dollars per share) | $ / shares	18.00
Weighted average grant date fair value, unvested balance at the end of the period (in dollars per share) | $ / shares	$ 8.65
Share Awards
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Unvested balance, beginning of the period (in shares)	0
Granted (in shares)	0
Vested (in shares)	0
Forfeited (in shares)	0
Unvested balance, end of the period (in shares)	0

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SHARE BASED PAYMENTS (Summary of share based compensation expense and unearned compensation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	$ 1,799	$ 3,474	$ 4,255	$ 5,432
Unearned Compensation	7,369		7,369		$ 6,668
LTIP Unit Awards
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	1,142	1,428	2,951	2,791
Unearned Compensation	4,179		4,179		2,878
Restricted Share Awards
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	342	459	674	795
Unearned Compensation	1,080		1,080		1,051
Share Awards
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	0	402	0	402
Unearned Compensation	0		0		0
Market Based
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	315	430	630	689
Unearned Compensation	2,110		2,110		2,739
Performance Based
Share-based Compensation Arrangement by Share-based Payment Award
Share Based Compensation Expense	0	$ 755	0	$ 755
Unearned Compensation	$ 0		$ 0		$ 0

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SHARE BASED PAYMENTS (Remaining unvested target units expected to vest) (Details)	Jun. 30, 2020 shares
2020
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	528,324
2021
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	1,042,502
2022
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	3,654
2023
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	531
LTIP Unit Awards | 2020
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	524,540
LTIP Unit Awards | 2021
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	898,126
LTIP Unit Awards | 2022
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	0
LTIP Unit Awards | 2023
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	0
Restricted Share Awards | 2020
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	3,784
Restricted Share Awards | 2021
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	144,376
Restricted Share Awards | 2022
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	3,654
Restricted Share Awards | 2023
Share-based Compensation Arrangement by Share-based Payment Award
Remaining unvested target units, expected to vest (in units)	531

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EARNINGS PER SHARE (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Basic and Diluted
Net (Loss) Income		$ (71,780)	$ 5,559	$ (97,752)	$ (2,323)
Loss allocated to Noncontrolling Interests		10,360	41	13,257	1,264
Distributions to Preferred Shareholders		(6,044)	(6,043)	(12,088)	(12,087)
Dividends Paid on Unvested Restricted Shares and LTIP Units		0	(271)	0	(553)
Net Loss applicable to Common Shareholders		$ (67,464)	$ (714)	$ (96,583)	$ (13,699)
DENOMINATOR:
Basic (in shares)		38,609,922	39,127,385	38,587,011	39,121,421
Effect of dilutive securities:
Restricted stock awards and LTIP units (unvested) (in shares)		0	0	0	0
Contingently issued shares and units (in shares)		0	0	0	0
Weighted average number of common shares - diluted (in shares)	[1]	38,609,922	39,127,385	38,587,011	39,121,421

[1] Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because 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) applicable to common shareholders.

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CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Supplemental Cash Flow Elements [Abstract]
Interest paid	$ 21,488	$ 27,802
Net payments (proceeds) for interest rate derivatives	1,505	(2,443)
Cash paid for income taxes	$ 233	$ 466

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CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Non-cash Investing And Financing Activities) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Noncash Investing and Financing Items [Abstract]
Common Shares issued as part of the Dividend Reinvestment Plan	$ 14	$ 42
Issuance of share based payments	6,404	12,119
Accrued payables for capital expenditures placed into service	1,398	1,268
Adjustment to Record Noncontrolling Interest at Redemption Value	(3,196)	148
Adjustment to Record Right of Use Asset & Lease Liability	$ 0	$ 55,515

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CASH FLOW DISCLOSURES AND NON CASH INVESTING AND FINANCING ACTIVITIES (Reconciliation of Cash) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Supplemental Cash Flow Elements [Abstract]
Cash and cash equivalents	$ 23,228	$ 27,012	$ 36,780
Escrowed cash	7,374	9,973	10,767
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$ 30,602	$ 36,985	$ 47,547	$ 40,783