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FelCor Shares Drop on Divestiture News

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Shares of FelCor Lodging Trust Incorporated (FCH) fell 1.4% following the announcement of the divestiture of its two non-strategic hotels on Wednesday. This Irving, TX-based real estate investment trust (:REIT), sold 251-room Embassy Suites Hotel-BWI Airport and 196-room Doubletree Suites Hotel-Dana Point at a combined price of  $54.1 million. FelCor intends to utilize the proceeds for repayment of outstanding debts.

The current sell-off is in line with the usual company strategy of repositioning its portfolio. In fact, to date, FelCor has sold 28 non-strategic hotels for a total of $627.0 million. Moreover, the company is presently under negotiations or has already finalized the sale of four hotels at a composite value of around $73.0 million.

FelCor is the owner of a diversified portfolio of upper-upscale and luxury hotels, spreading across the U.S. Boasting partnerships with several leading hotel companies, its portfolio flaunts renowned brand names such as Doubletree, Embassy Suites Hotels, Hilton, Fairmont, Marriott, Renaissance, Sheraton, Westin and Holiday Inn.

In 2014, FelCor sold the Embassy Suites hotels in Atlanta for $17.2 million and in Bloomington for $24 million. Additionally, the company has consented to vend off DoubleTree Suites in Charlotte and Dana Point for a combined price of $69.9 million. FelCor has also been negotiating to sell three hotels for aggregate gross proceeds of $44.0 million.

FelCor currently carries a Zacks Rank #3 (Hold). Some better-ranked equity REITs include The GEO Group, Inc. (GEO), Terreno Realty Corp. (TRNO) and Aviv REIT, Inc. (AVIV). All these stocks sport a Zacks Rank #1 (Strong Buy).

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