RLJ Closes Public Offering
Bethesda, Md.-based real estate investment trust (:REIT) RLJ Lodging Trust (RLJ) recently announced the closure of its previously announced public offering. The company priced the public offering of 15.9 million common shares at $21.60 per share, including 2.07 million shares sold to underwriters to cover the over-allotments.
RLJ Lodging generated net proceeds of around $327.6 million (after deducting the underwriting discount and other estimated offering costs) from the offering. The company plans to direct the net proceeds toward funding prospective acquisitions and for other corporate purposes. Also, RLJ Lodging expects to utilize the amount to timely pay off its outstanding balance under its unsecured revolving credit facility.
At the end of 2012, RLJ Lodging had $115.9 million worth of unrestricted cash and $284.0 million available under its unsecured revolving credit facility.
BofA Merrill Lynch of Bank of America Corporation (BAC), Barclays PLC (BCS) and Wells Fargo Securities of Wells Fargo & Company (WFC) acted as joint book-running managers for the public offering. On the other hand, PNC Capital Markets LLC, RBC Capital Markets and Deutsche Bank Securities acted as senior co-managers.
For RLJ Lodging, though the public offering would result in share dilution, the payment of debt is encouraging as it would reduce interest expenses. Moreover, the opportunistic acquisitions would help RLJ Lodging enhance its portfolio quality, which in turn would be accretive to its earnings going forward.
As a matter of fact, RLJ Lodging has been on an acquisition spree. Recently, the company acquired the historic Humble Oil Building complex in downtown Houston for $79.5 Million. The complex comprised 1 planned hotel conversion and 2 existing premium-branded hotels – Courtyard Houston Downtown Convention Center and Residence Inn Houston Downtown Convention Center.
Founded in 2000, RLJ Lodging invests in real estate markets and manages real estate funds in the U.S. It focuses on the acquisition of premium-branded, focused-service and compact full-service hotels. Currently, RLJ Lodging’s portfolio consists of 147 hotels and 1 planned hotel conversion located across 21 states and the District of Columbia.
RLJ Lodging currently carries a Zacks Rank #3 (Hold).
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