Black-Owned Lodging Company Completes $1B Acquisition
By Ryan Velez
Robert Johnson is known as one of the great Black moguls of our time, particularly known for being the founder and former chairman of Black Entertainment Television. While his time with that entity is over, he is still making plenty of business moves, and Black Enterprise reports on his latest major venture, his RLJ Lodging Trust completing its purchase of FelCor Lodging Trust in a stock deal worth about $1 billion.
The deal closed in late August after shareholders of RLJ Lodging, based in Bethesda, Maryland, approved the acquisition of the Irving, Texas-based FelCor, and while some are questioning how exactly RLJ plans to boost value for shareholders post-merger, RLJ Lodging counters that shareholder value is a priority. The investor in question, Land and Buildings, said in an open letter to shareholders that RLJ management had been disappointing and that the company’s performance was closely linked to shareholder value. Land and Buildings is run by Jonathan Litt, who Reuters describes as someone who aggressively targets companies that he views undervalued and needs leadership or strategic changes.
On September 7th, the company formally addressed the complaints, stating “We have and will continue to cultivate strong relationships with our shareholders and welcome their input and constructive dialogue. Our board of trustees and management team are fully committed to maximizing shareholder value.”
In respect to its FelCor merger, RLJ stated: “We will continue to focus on unlocking the strategic benefits from the merger such as the realization of synergies, balance sheet optimization, strategic dispositions, and re-positioning projects, which we believe will drive long-term shareholder value.
This merger will make RLJ Lodging the nation’s third-largest publicly traded lodging real estate investment trust (REIT). According to reports, the transaction will lead to a combined company with cap of about $4 billion and a total enterprise value of nearly $7 billion. This will have a total ownership stake in 160 hotels nationally, with a total of nearly 31,500 rooms in 26 states, Washington, D.C. and mainly urban and coastal markets. RLJ Lodging also operates hotels under well-known brands, including Courtyard by Marriott, Homewood Suites by Hilton, Hyatt Place, and Wyndham. RLJ Lodging has said it will discuss the full benefits of the deal in an earnings conference call in November.