BETHESDA, MD—Some two months after fielding a hostile bid from Ashford Hospitality Trust. FelCor Lodging Trust has found a marriage partner in the form of locally based RLJ Lodging Trust. The two companies said Monday that FelCor would merge with and into a wholly-owned RLJ subsidiary in an all-stock transaction.
Post-merger, RLJ is expected to have a pro forma equity market capitalization of approximately $4.2 billion and a total enterprise value of $7 billion. The result will be the third largest pure-play hotel REIT, and the largest dedicated to owning focused-service and compact full-service hotels.
“As chairman of RLJ Lodging Trust, I would like to say that we are very excited about this combination with FelCor,” says Robert l. Johnson. “I am confident that, under the management of our seasoned team of executives, this portfolio will yield significant benefits to the shareholders of both companies.”
The combined company will have ownership interests in 160 hotels, up from RLJ's current count of 122 properties. With 26 states and the District of Columbia represented, the post-merger RLJ portfolio will be diversified across Marriott, Hilton, Hyatt and Wyndham flags, and the merger is expected to provide an immediate boost to RLJ's pro forma RevPAR. Observes Ross H. Bierkan, RLJ's president and CEO, “In addition to being immediately accretive to our RevPAR, merging with FelCor expands our geographic footprint in highly-desirable markets on the West Coast, while strengthening our presence in other coastal markets in the East and the South.”
Johnson and Bierkan will continue in their respective roles in the combined company, which will continue trading under the RLJ stock ticker. The RLJ board will be increased by one member to eight, with the addition of a director mutually acceptable to RLJ and FelCor.
Barclays is acting as the financial advisor to RLJ, with Hogan Lovells and Arent Fox serving as legal advisors. BofA Merrill Lynch is acting as FelCor's financial advisor, and Sidley Austin, Polsinelli and Jones Day provided legal advice to the Irving, TX-based REIT. ICR LLC and Financial Profiles Inc. are serving as communications advisors for the transaction, which is expected to close by the end of 2017.
BETHESDA, MD—Some two months after fielding a hostile bid from Ashford Hospitality Trust. FelCor Lodging Trust has found a marriage partner in the form of locally based RLJ Lodging Trust. The two companies said Monday that FelCor would merge with and into a wholly-owned RLJ subsidiary in an all-stock transaction.
Post-merger, RLJ is expected to have a pro forma equity market capitalization of approximately $4.2 billion and a total enterprise value of $7 billion. The result will be the third largest pure-play hotel REIT, and the largest dedicated to owning focused-service and compact full-service hotels.
“As chairman of RLJ Lodging Trust, I would like to say that we are very excited about this combination with FelCor,” says Robert l. Johnson. “I am confident that, under the management of our seasoned team of executives, this portfolio will yield significant benefits to the shareholders of both companies.”
The combined company will have ownership interests in 160 hotels, up from RLJ's current count of 122 properties. With 26 states and the District of Columbia represented, the post-merger RLJ portfolio will be diversified across Marriott, Hilton, Hyatt and Wyndham flags, and the merger is expected to provide an immediate boost to RLJ's pro forma RevPAR. Observes Ross H. Bierkan, RLJ's president and CEO, “In addition to being immediately accretive to our RevPAR, merging with FelCor expands our geographic footprint in highly-desirable markets on the West Coast, while strengthening our presence in other coastal markets in the East and the South.”
Johnson and Bierkan will continue in their respective roles in the combined company, which will continue trading under the RLJ stock ticker. The RLJ board will be increased by one member to eight, with the addition of a director mutually acceptable to RLJ and FelCor.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
