FelCor Divests Non-Core Assets - Analyst Blog
12 Abril 2012 - 2:36PM
Zacks
FelCor Lodging Trust Inc. (FCH), a real estate
investment trust (REIT) that owns upper-upscale hotels, has
recently decided to sell 6 non-core assets to an unnamed buyer for
$103.0 million, representing a cap rate of 6.8% based on 2011 net
operating income. About $3.9 million of the purchase price was paid
in advance in cash, and the transaction is expected to close in
second quarter 2012.
Comprising 1,527 rooms on aggregate, the divested portfolio
includes the Holiday Inn San Antonio-Airport, the Sheraton Suites
Ft. Lauderdale-Cypress Creek, Doubletree Guest Suites hotels in
Raleigh/Durham and Tampa-Rocky Point, and the Embassy Suites hotels
in Boca Raton and St. Paul.
The asset sale is part of the long-term strategy of the company
to reposition its portfolio to focus on a diversified asset-base of
high-quality hotels in major markets and resort locations that have
steep barriers to entry and solid demand to drive healthy return on
investments. At present FelCor has 39 non-strategic hotels in its
kitty, out of which 16 are currently being offered for sale
(including the just-concluded sale of 6 hotels).
The company intends to utilize the proceeds from the divesture
to repay about $73 million of secured debt. The remainder of the
sale proceeds is expected to be used to pay a portion of its
accrued preferred dividends as well as its regular quarterly
preferred dividends on July 31, 2012. Going forward, FelCor expects
to fund the remaining accrued dividends in 2012 through proceeds
from future asset sale.
FelCor presently owns 76 hotels and resorts in 22 states in the
U.S.and Canadaunder globally-recognized brands such as – Embassy
Suites Hotels, Doubletree, Hilton, Marriott, Renaissance, Fairmont,
Sheraton, Westin and Holiday Inn.
We currently have a Neutral recommendation on FelCor, which has
a Zacks #3 Rank that translates into a short-term Hold
recommendation. We also have a Neutral recommendation and a Zacks
#3 Rank for Host Hotels & Resorts Inc. (HST),
one of the competitors of FelCor.
FELCOR LODGING (FCH): Free Stock Analysis Report
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
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Zacks Investment Research
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