Bethesda's RLJ Lodging Trust and Texas' FelCor Lodging Trust shareholders have approved the real estate investment trust's acquisition of FelCor. The transaction is expected to close at the end of August and will create a $7-billion hospitality REIT.
As part of the deal, FelCor will become a wholly owned RLJ subsidiary and will be delisted on the New York Stock Exchange at the close of trading on Aug. 31. Each of FelCor's shares will be converted into 0.362 shares of newly issued common shares of RLJ stock. RLJ shareholders will gain ownership of 71 percent of the merged company's equity while FelCor shareholders will own 29 percent.
The merged company will own interest in 60 hotels, allowing RLJ to expand its presence on the West Coast and to strengthen its presence in the eastern and southern U.S. The company's portfolio of 31,367 guestrooms will spread across 26 states and Washington D.C. under various brands, including Marriott, Hilton, Hyatt and Wyndham. RLJ expects to save about $22 million from eliminating "duplicative corporate and administrative costs." The trust will also have $700 million of available liquidity, including an undrawn credit of $400 million. Robert Johnson will maintain his position as EC of RLJ while Ross Bierkan will continue to be RLJ CEO as the company headquarters will be in Bethesda, Md.
On Tuesday, 78 percent of RLJ's shareholders voted for the acquisition while 99 percent of FelCor's shareholders voted to approve it.
Last month, RLJ postponed its shareholders meeting for the FelCor acquisition by close to a week because it was considering Blackstone Group's $3-billion acquisition offer. RLJ ultimately decided to turn down the deal.