BETHESDA, MD—RLJ Lodging Trust has officially completed its merger with FelCor Lodging Trust. RLJ shareholders and FelCor stockholders on Aug. 15 approved the merger, which was originally publicly announced on April 24. Barclays acted as financial advisor and Hogan Lovells and Arent Fox acted as legal advisors to RLJ in connection with the merger.
“We are pleased to complete this transformative merger that creates the preeminent lodging REIT in the upscale focused-service and compact full-service space,” said Ross H. Bierkan, president and CEO of RLJ Lodging Trust. “Over the coming months we look forward to realizing the benefits of our expanded platform and executing our strategic plan to drive long-term shareholder value.”
The combined company will continue to be led by Bierkan, Robert L. Johnson as executive chairman, and Leslie D. Hale as COO and CFO. Concurrently with the completion of the merger, the number of trustees on RLJ’s board of trustees has increased to eight. Patricia L. Gibson, a former director of FelCor, joined the existing seven members on RLJ’s board of trustees.
Effective as of the merger, shares of FelCor common stock will no longer trade on the New York Stock Exchange. Each former share of FelCor common stock has been converted into 0.362 newly issued RLJ common shares. FelCor’s operating units have been exchanged for limited partnership units in RLJ’s operating partnership at a similar exchange ratio of 0.362.
In addition, each outstanding share of FelCor’s $1.95 Series A cumulative convertible preferred stock has been converted into a newly created Series A cumulative convertible preferred share of RLJ. The RLJ Series A preferred shares will be listed on the New York Stock Exchange under the symbol “RLJprA.”
RLJ on Aug. 4 reported its Q2 2017 results. Its pro forma RevPAR for the three months ended June 30 decreased 3.4% over the comparable period in 2016, driven by a pro forma occupancy decrease of 2.1% and a pro forma ADR decrease of 1.2%. During the same time period, RLJ’s net income decreased $16.3 million to $42.5 million, representing a 27.7% decrease over the same comparable period. RLJ’s pro forma hotel EBITDA margin during the same time frame decreased 150 basis points over the same comparable period to 37.7%. The REIT’s pro forma consolidated hotel EBITDA during the same time period decreased $8.3 million to $110.3 million, representing a 7% decrease over the same comparable period.
RLJ’s portfolio consists of 158 hotels with approximately 31,180 rooms located in 26 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms. The REIT’s portfolio is mainly made up of brands from Marriott, Hilton and Hyatt.