FelCor Lodging Trust Inc. (FCH) – a real estate investment trust – is on a spree of making divestitures. The company sold the 244-room DoubleTree hotel in Wilmington, Del. for $27.7 million and also inked a deal to sell the 277-room Embassy Suites hotel in Jacksonville for $10 million. The company would use the funds generated through the sale of these assets for repaying its debt.
The sale of the Embassy Suites hotel is expected to be completed in October and a non-refundable deposit toward the purchase price has already been paid by the buyer. Last month, FelCor has announced the selling of the 223-room Embassy Suites hotel in Baton Rouge for $20 million.
Notably, the asset sell off help in strengthening FelCor’s balance sheet and leverage ratios, thereby providing greater financial flexibility. It is part of the company’s long-term strategy to reposition its portfolio through the divestiture of non-strategic assets and investment in high-quality hotels in major markets to drive healthy return on investments.
FelCor is disposing 39 non-strategic hotels, as part of its long-term strategy. Of this, the company would have sold 24 (including the above-mentioned dispositions) of the 30 hotels brought to market since Dec 2010 for around $530 million. Another 3 hotels are currently in the negotiation stage.
As of Jun 30, 2013, FelCor had $1.7 billion of consolidated debt bearing a 6.3% weighted-average interest rate and a seven-year weighted-average maturity. The company’s cash and cash equivalents as of that date were $66.2 million, ahead of $45.7 million as of Dec 31, 2012. We expect such strategic moves to position FelCor Lodging favorably, going forward.
FelCor Lodging currently owns 62 upper-upscale full-service hotels and resorts under globally recognized brands such as Embassy Suites Hotels, Doubletree, Marriott, and several others. Most of the properties of the company are located in major markets across the U.S.
FelCor Lodging currently carries a Zacks Rank #3 (Hold). A number of promising stocks that are worth a look include Getty Realty Corp. (GTY), Sotherly Hotels Inc. (SOHO) and Sovran Self Storage Inc. (SSS), all carrying a Zacks Rank #1 (Strong Buy).