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FelCor’s portfolio repositioning continues
April 10 2012

FelCor is ridding its portfolio of properties where internal rate of return does not exceed weighted average cost of capital.

  • FelCor last week sold a portfolio of six properties, comprising 1,527 rooms, to an undisclosed buyer.
  • The REIT’s portfolio repositioning began in 2006 with the sale of 45 hotels.
  • Company officials expect the sales process to be complete by the middle of 2013.
By Shawn A. Turner
HNN contributor

IRVING, Texas—The second phase of FelCor Lodging Trust’s portfolio repositioning continued last week with six properties under contract to be sold.


The Sheraton Suites Cypress Creek Ft. Lauderdale

The real-estate investment trust is poised to sell the portfolio, which consists of 1,527 rooms, to an undisclosed buyer. Included in the portfolio are the Holiday Inn San Antonio International Airport; Sheraton Suites Ft. Lauderdale-Cypress Creek in Florida; DoubleTree Guest Suites properties in Raleigh/Durham, North Carolina, and Tampa-Rocky Point, Florida; and Embassy Suites hotels in Boca Raton, Florida, and St. Paul, Minnesota.


FelCor’s portfolio restructuring began in 2006 with the sale of 45 hotels. The REIT is marketing for sale 39 hotels during this second phase, which was delayed because of the recent recession, FelCor’s VP of Strategic Planning and Investor Relations Stephen A. Schafer wrote in an email.

The REIT is targeting for sale those hotels where company officials believe internal rate of return does not exceed weighted average cost of capital, Schafer said. “We also looked at concentration risk (markets where we have more exposure than optimal),” he said. “There would be an opportunity cost of holding those hotels and (the company) wanted to deploy that capital in higher yielding investments.”

Essentially, Schafer said, the company is selling hotels in markets with low barriers to entry that won’t produce a high level of revenue-per-available-room or earnings-before-interest-taxes-depreciation-and-amortization growth as the company’s core hotels. Also, hotels that would require capital expenditures, but aren’t producing solid returns, are being targeted for sale.

Schafer said company officials are confident the hotels on the market will be sold at the prices FelCor wants. The properties, Schafer said, are generating good interest from buyers, which include management companies and private equity firms. FelCor expects further sales this year, he said.

The last group of hotels will be put on the market later this year or in early 2013, Schafer said. Assuming the company sells a hotel a month (excluding any portfolio deals), the sales should be complete by the middle of 2013, he said.

FelCor owns 76 primarily upper-upscale, full-service hotels, flagged under brands such as Fairmont, Hilton, Marriott, Sheraton and Westin.

4/28/2012 10:05:00 PM
Please release a list of potential hotels for sale without or before listing them with a broker. Seems like individuals want to buy but are not welcomed by the brokers, If Felcor may temparily have an inhouse person handle for sale properties., both the buyer and the seller (Felcor ) may come out better. Or In case an individual ask's about a certain property "answer " or let the buyer make an offer Thanking Buyer and FCH stockholder.
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