RLJ Lodging Trust and FelCor Lodging Trust have announced plans to enter a definitive merger under which FelCor will be consolidated with and into a wholly owned subsidiary of RLJ. Following the close of the agreement, RLJ is expected to hold a total enterprise of $7 billion and ownership interests in 160 hotels with 31,467 guestrooms. RLJ shareholders will own approximately 71 percent of the combined, fully diluted equity, while FelCor shareholders will own 29 percent. Each share of FelCor common stock will be converted into 0.362 shares of newly issued common shares of RLJ common stock.
“We are very pleased to combine with RLJ Lodging Trust to create a leading lodging REIT that is positioned for significant long-term growth. This merger creates a company that has greater reach in key markets with a streamlined operating structure and more advantageous cost of capital,” says FelCor CEO Steven R. Goldman. “FelCor shareholders are receiving an attractive valuation for the company’s hotel assets and have the opportunity to benefit from a highly respected management team with a history of value creation.”
“Combining these two complementary portfolios creates a best-in-class platform that is well positioned to deliver long-term growth and generate significant shareholder value,” adds RLJ president and CEO Ross H. Bierkan. “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. RLJ’s enhanced scale post-merger is expected to generate both corporate- and property-level operating cost benefits and market leverage opportunities, which will drive shareholder value over time.”
