By Frederick H. Lowe
BETHESDA, MD.–RLJ Lodging Trust, whose executive chairman and founder is billionaire Robert L. Johnson, on Monday announced a merger agreement with FelCor Lodging Trust Inc., creating the nation’s third-largest pure play lodging real estate investment trust (REIT) by enterprise value.
The combined company will have a market capitalization of approximately $4.2 billion and a total enterprise value of $7 billion. FelCor, which is based in Irving, Texas, will become a wholly owned subsidiary of RLJ, which is based in Bethesda, Md., when the deal closes later this year. A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate.
The combined company will have ownership interests in 160 hotels, including premium-branded hotels primarily located in urban and coastal markets.
“As chairman of RLJ Lodging Trust, I would like to say that we are very excited about this combination with FelCor. I am confident that under the management of our seasoned team of executives, this portfolio will yield significant benefits to the shareholders of both companies,” Johnson said in a statement.
Steven R. Goldman, FelCor’s CEO, said the merger creates a lodging REIT that is positioned for significant growth.
Under the terms of the agreement, FelCor common stock will be converted into 0.362 shares of newly issued common shares of RLJ common stock.
RLJ’s shareholders are expected to own approximately 71 percent of the combined company’s fully diluted equity and FelCor’s shareholders are expected to own the remaining 29 percent.
After the merger RLJ Lodging Trust will retain its name. The company will be traded on the New York Stock Exchange under the ticker symbol of “RLJ.”