BETHESDA, MD–Jonathan Litt, head of activist investment firm Land and Buildings, has come out against RLJ Lodging's newest board of directors appointment: Robert J. McCarthy, former chief operations officer and group president at Marriott International. RLJ apparently chose McCarthy over suggestions made by Land and Buildings for the position.
McCarthy's appointment increases the size of the company's board from eight to nine members, following Patricia Gibson who was tapped to join the board in September 2017.
Land and Buildings was scathing in its assessment of this latest move. It wrote:
While we agree that the RLJ management team, CEO Ross Bierkan and CFO/COO Leslie Hale, are in desperate need of both capital allocation and operating experience – given the horrible performance of RLJ shares following numerous capital allocation missteps – the most glaring need in the boardroom is relevant capital markets and REIT experience.
And
The interests of Executive Chairman Robert Johnson, CEO Ross Bierkan and CFO/COO Leslie Hale are clearly misaligned with the interests of RLJ shareholders given the outsized compensation they earned in 2016 of $3.6 million, $4.4 million and $4 million, respectively.
Land and Buildings added that it has preserved its rights to seek the election of director candidates at the upcoming 2018 Annual Meeting.
Land and Buildings has been disgruntled with the REIT since at least last summer when RLJ rejected an all cash offer from Blackstone for north of $24 per share. Last September the activist shareholder urged RLJ to consider selling itself, noting in a statement that management has been disappointing and the REIT's performance had not unlocked shareholder value.
RLJ responded to the public letter with a statement disputing Land and Building's opinion.
At the start of September RLJ Lodging Trust closed on its $7 billion merger with FelCor Lodging Trust and in this endeavor as well, Land and Buildings has found fault with the REIT. It noted in its letter that RLJ issued equity “at a substantial discount to net asset value to help the FelCor acquisition” and that there was a lack of transparency on synergies related to the merger with FelCor.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
