FelCor Lodging Trust Inc. , a real estate investment trust (REIT) that owns upper-upscale hotels, has recently sold two non-strategic hotels to an unnamed company for $70.0 million. The purchaser has paid $2.1 million cash as deposit money for the transaction, while the balance is expected to be paid when the sale consummates in October.
FelCor has divested Embassy Suites – New Orleans-Convention Center hotel in New Orleans, Louisiana; and Embassy Suites – Nashville-Airport in Nashville, Tennessee. The 370-room Embassy Suites – New Orleans-Convention Center hotel is located in the heart of the city's busy cultural center, in close proximity to the Port of New Orleans.
On the other hand, Embassy Suites – Nashville-Airport hotel is located at an easy commutable distance from the Nashville International Airport; and from the business and entertainment district of downtown Nashville. Besides the locational advantage, both the hotels also boast of an outstanding reputation for its food and beverage selections, with multiple options to accommodate every budget and taste.
The company intends to utilize the proceeds from the divestiture to pay the balance $37.7 million of its accrued preferred dividends when it pays the regular quarterly preferred dividends on October 31, 2012.
The asset sale is part of the long-term strategy of the company to reposition its portfolio to focus on a diversified asset-base of high-quality hotels in major markets and resort locations that have steep barriers to entry and solid demand to drive healthy return on investments. At present, FelCor has 39 non-strategic hotels up for sale in its portfolio, out of which a total of 18 hotels were sold since December 2010.
FelCor currently owns 69 hotels and resorts in 22 states in the U.S. under globally recognized brands such as – Embassy Suites Hotels, Doubletree, Hilton, Marriott, Renaissance, Fairmont, Sheraton, Westin and Holiday Inn.
We have a Neutral recommendation on FelCor, which has a Zacks #3 Rank that translates into a short-term Hold recommendation. We also have a Neutral recommendation and a Zacks #2 Rank (short-term Buy rating) for Host Hotels & Resorts Inc. (HST - Free Report) , one of the competitors of FelCor.