“But did I think we would all ride off into the sunset together? Of course!”

Despite the surprising -- but very friendly -- departure, the transition has been seamless, Bierkan told GlobeSt.com. Bierkan, who was serving as interim CEO for the last few months, was just named the company's permanent CEO.

GlobeSt.com spoke with Bierkan the morning of his announcement about the transition, the executive “search” for Baltimore's successor and how the REIT will proceed going forward. Following are some excerpts of the conversation.

GlobeSt.com: How was it that the transition went so well, especially considering Baltimore's deep roots at RLJ?

Bierkan: The personal loss was strong for all of us. But operationally it has been seamless. Our corporate culture is baked in and we have been following the same [investment and operations] play book long before we moved to a public model.

Also, we named CFO Leslie D. Hale Chief Operating Officer as well. Prior to this, we have not had a COO at the firm. But I thought it was time for Leslie to be recognized both internally as well as have the Street understand that we have a talented CFO who is also immersed in our operations.

RLJ is Built for A Late Cycle Environment

GlobeSt.com: You mentioned RLJ's playbook. What does it say about navigating the end part of the hotel cycle?

Bierkan: There is no doubt that we are late in the cycle and RevPAR is decelerating But RLJ is built for this. The types of hotels we buy -- while are upscale, select-service hotels in urban or dense commercial environments under the best brand families -- are very resilient hotels. They tend to gain share in a softening environment.

Also our balance sheet is very strong. We have retired debt every year since we have gone public. Right now, 111 out of our 121 hotels are unencumbered by mortgages. So even if one hotel has a tough year it is being supported by rest of the balance sheet.

GlobeSt.com: That is unusual for a REIT.

Bierkan: Yes, but we think it is an appropriate way to lever a hospitality REIT because hotels can be volatile asset class and it is a way to derisk our portfolio.

GlobeSt.com: Have you ever gotten pushback from shareholders? All that untapped leverage?

Bierkan: When we were explaining our strategy during our roadshow five years ago there were some hedge funds who thought we should lever up in an improving market. We politely disagreed and they probably did not buy in during the IPO. But this is an all-weather strategy that works for both defensive and offensive times.

GlobeSt.com: So you will lever up when the cycle is at the right point?

Bierkan: We could, not will, lever up when it is at the right point.

About That Executive Search

GlobeSt.com: When Baltimore's departure was announced, I remember an executive search committee was set up by the board with the plan to look both internally and externally. I take it the search didn't last that long?

Bierkan: (laughs) Actually, the search never took place. When Tom made his announcement there was a certain element of shock that compelled the board to move quickly and make these announcements. They named me interim CEO. As the days and weeks went by they observed that the house wasn't on fire and that Leslie and I were addressing the leadership concerns of both the staff and the market.

BETHESDA, MD—Several months ago Thomas J. Baltimore Jr., then CEO of RLJ Lodging Trust, got the call. You know the one -- the call from an industry luminary who has an offer that just cannot be refused.

Baltimore had been co-founder, along with executive chairman Robert L. Johnson of the REIT. In fact, Baltimore, Johnson and Ross H. Bierkan had worked together since before the REIT launched -- when RLJ Lodging Trust was RLJ Development.

Then, earlier this year Baltimore was recruited become president & CEO of Hilton Worldwide's planned Hotel REIT, Parks Hotels & Resorts.

“No one expected this to happen but when Christopher J. Nassetta [president and CEO of Hilton Worldwide] calls you, you answer,” Bierkan tells GlobeSt.com.

“But did I think we would all ride off into the sunset together? Of course!”

Despite the surprising -- but very friendly -- departure, the transition has been seamless, Bierkan told GlobeSt.com. Bierkan, who was serving as interim CEO for the last few months, was just named the company's permanent CEO.

GlobeSt.com spoke with Bierkan the morning of his announcement about the transition, the executive “search” for Baltimore's successor and how the REIT will proceed going forward. Following are some excerpts of the conversation.

GlobeSt.com: How was it that the transition went so well, especially considering Baltimore's deep roots at RLJ?

Bierkan: The personal loss was strong for all of us. But operationally it has been seamless. Our corporate culture is baked in and we have been following the same [investment and operations] play book long before we moved to a public model.

Also, we named CFO Leslie D. Hale Chief Operating Officer as well. Prior to this, we have not had a COO at the firm. But I thought it was time for Leslie to be recognized both internally as well as have the Street understand that we have a talented CFO who is also immersed in our operations.

RLJ is Built for A Late Cycle Environment

GlobeSt.com: You mentioned RLJ's playbook. What does it say about navigating the end part of the hotel cycle?

Bierkan: There is no doubt that we are late in the cycle and RevPAR is decelerating But RLJ is built for this. The types of hotels we buy -- while are upscale, select-service hotels in urban or dense commercial environments under the best brand families -- are very resilient hotels. They tend to gain share in a softening environment.

Also our balance sheet is very strong. We have retired debt every year since we have gone public. Right now, 111 out of our 121 hotels are unencumbered by mortgages. So even if one hotel has a tough year it is being supported by rest of the balance sheet.

GlobeSt.com: That is unusual for a REIT.

Bierkan: Yes, but we think it is an appropriate way to lever a hospitality REIT because hotels can be volatile asset class and it is a way to derisk our portfolio.

GlobeSt.com: Have you ever gotten pushback from shareholders? All that untapped leverage?

Bierkan: When we were explaining our strategy during our roadshow five years ago there were some hedge funds who thought we should lever up in an improving market. We politely disagreed and they probably did not buy in during the IPO. But this is an all-weather strategy that works for both defensive and offensive times.

GlobeSt.com: So you will lever up when the cycle is at the right point?

Bierkan: We could, not will, lever up when it is at the right point.

About That Executive Search

GlobeSt.com: When Baltimore's departure was announced, I remember an executive search committee was set up by the board with the plan to look both internally and externally. I take it the search didn't last that long?

Bierkan: (laughs) Actually, the search never took place. When Tom made his announcement there was a certain element of shock that compelled the board to move quickly and make these announcements. They named me interim CEO. As the days and weeks went by they observed that the house wasn't on fire and that Leslie and I were addressing the leadership concerns of both the staff and the market.