Zacks_Analysts' Blog : FelCor Sells Asset - Analyst Blog

FelCor Lodging Trust Inc. (FCH), a real estate investment trust (REIT) that owns upper-upscale hotels, has recently sold the Sheraton Premiere Hotel at Tysons Corner in Vienna, Virginia, to The JBG Companies for $84.5 million in cash. The property, however, will continue to be operated under the ‘Sheraton’ brand by Starwood Hotels & Resorts Worldwide Inc. (HOT) in accordance with a long-term management contract.

Since its inception in 1960, The JBG Companies has evolved as an active developer, owner and operator of office, residential, hotel and retail properties with over $10 billion assets under management. The company is one of the leading real estate companies in the Washington metropolitan area.

The 443-room hotel was owned as a joint-venture property by FelCor and Starwood Hotels. FelCor received $42.25 million in gross proceeds from the transaction, the sale price of which was approximately 23x trailing-twelve-month hotel EBITDA (earnings before interest, tax, depreciation and amortization).

The asset sale was part of the long-term strategy of Felcor to focus on a diversified portfolio of high-quality hotels in major markets and resort locations that have high barriers to entry. Since 2005, the company has sold 45 non-strategic hotels in secondary and tertiary markets primarily comprising of mid-scale hotels.

Felcor presently owns 83 hotels and resorts in 22 states in the U.S. and Canada under globally-recognized brands such as – Embassy Suites Hotels, Doubletree, Hilton, Marriott, Renaissance, Fairmont, Sheraton, Westin and Holiday Inn.

We currently have a ‘Neutral’ recommendation on Felcor, which presently has a Zacks #3 Rank that translates into a short-term 'Hold' recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.