RLJ, FelCor $7B Merger Creates Third-Largest Publicly Traded Lodging REIT

Hotel room, hotel industry

RLJ Lodging Trust and FelCor Lodging Trust, two major hotel real estate investment trusts, announced a merger agreement Monday that will create a $7B pure-play lodging REIT, the third-largest in the industry.

The all-stock transaction will turn FelCor into a wholly owned subsidiary of RLJ, and once complete the merged company will have a market cap of roughly $4.2B. Combined, the new REIT will hold ownership interests in 160 hotels with flags like Marriott, Hilton, Hyatt and Wyndham in urban and coastal markets like Washington, DC, Florida, California and Boston.

Per the terms of the agreement, each FelCor share will be converted to about a third of a share of newly issued RLJ common stock. The new REIT will own a total of 31,467 rooms and will be immediately accretive to RLJ’s RevPAR (revenue per available room) jumping 5.4% to $137 from 2016’s RevPAR.

RLJ said the merger will enhance shareholder value and create a leading upscale hotel portfolio, positioning the combined REIT for future value creation and presenting significant liquidity opportunities and a strong balance sheet.

The transaction is expected to close by the end of 2017.

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