RLH Corporation to sell off bulk of owned hotels

Hotel RL Spokane at the Park, Wash.

RLH Corporation's board of directors approved the listing for sale of 11 of the company’s remaining 18 owned hotels. The hotels that are not being listed at this time are generally newer joint-venture acquisitions (Baltimore, Atlanta and Washington, D.C.), and a release from RLHC suggests the company will hold onto them for an additional period to allow for them to stabilize to higher revenues and profitability before marketing those, as well. The remaining hotels are leasehold interests with no near-term plan for disposal.

In recent years, RLH Corporation refreshed its original portfolio of brands, acquired a number of new brands and associated franchise agreements and organically added additional franchise agreements to contribute to the earnings growth of the company. RLH Corporation is focusing on investing its capital in higher-margin hotel franchise business rather than making significant new investments in direct ownership of hotel assets.

Today, the franchise portfolio stands at approximately 1,100 hotels compared to fewer than 100 three years ago. Consistent with RLH Corporation’s strategy of committing to franchising, the company intends to solicit offers to acquire the majority of its remaining owned hotels while seeking to maintain franchise or management contracts relating to those assets.

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RLH Corporation is working with commercial real estate company CBRE to market and sell these hotels. All of the listed hotels are owned through partnerships with outside investors. Working with its real estate investment partners, RLH Corporation expects to sell these hotels in the coming months subject to continuing favorable market conditions.

As its hotels are sold, the company will repay the long-term debt relating to those assets. As the hotel sales are achieved, the company’s real estate-specific costs of interest, depreciation and amortization will be reduced, with the goal of enhancing RLH Corporation's ability to generate positive earnings per share in the future. The release also states that from time to time, RLH Corporation will consider limited real estate investments to secure franchise agreements, but would normally expect to take minority positions in hotels that are expected to be repositioned and sold within three to five years.

The goal of the company’s long-term strategy is to achieve most of its earnings before tax, depreciation and amortization from its franchise business, and to aggressively grow its base of franchise agreements.

The hotels currently being listed for sale with CBRE are the following:

  1. Hotel RL Salt Lake City, Utah
  2. Hotel RL Spokane at the Park, Wash.
  3. Hotel RL Olympia, Wash.
  4. Red Lion Hotel Pasco, Wash.
  5. Red Lion Hotel Richland Hanford House, Wash.
  6. Red Lion Hotel Port Angeles, Wash.
  7. Red Lion Hotel Redding, Calif.
  8. Red Lion Hotel Eureka, Calif.
  9. Red Lion Hotel Boise Downtowner, Idaho
  10. Red Lion Hotel Templin’s on the River, Post Falls, Idaho
  11. Red Lion Inn & Suites Bend, Ore.

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