IRVING, TX-FelCor Lodging Trust Inc. has inked contracts to sell six of the 14 hotels it began marketing in late 2010.
The six properties, one of which is the Embassy Suites-Phoenix-Tempe, will generate gross proceeds of about $114 million, according to the REIT, which made the announcement during its first quarter 2011 earnings conference call.
The disposition program is part of FelCor’s long-term strategic plan to improve its portfolio quality, growth rates and diversification. Additionally, the REIT has identified an additional 21 hotels that it describes as “non-strategic.”
FelCor President and CEO Richard Smith said during the call that the hotel owner and operator will continue to evaluate the transaction market and will bring the additional hotels to market at the “appropriate time.” He declined to disclose any additional information about the hotels when further questioned by analysts on the call.
Smith expects the remaining eight hotels currently on the market will sell this year. The six assets currently under contract will generate about $40 million in net proceeds after debt repayment, according to Andrew Welch, FelCor's executive vice president and CFO.
During the earnings call, Welch said 12 of the 14 properties currently under contract or being marketed are part of a $250-million CMBS loan that matures this November. “The sale proceeds will reduce the outstanding balance on this facility so we will have less to refinance,” he noted.
Along with the dispositions, FelCor also agreed during the first quarter to acquire two Midtown Manhattan hotels, the Royalton and Morgans, for $140 million. The seller, Morgans Hotel Group Co., will continue to manage the properties, which have a total of 282 guest rooms.
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