FelCor's 45-Hotel Sale Heads Into Final Lap

In separate transactions earlier this month, FelCor sold two Embassy Suites: a 202-key hotel at the Covina-Interstate 10 junction in Los Angeles and 198-room asset [pictured] at 74-70 Highway 111 in Palm Desert, CA. There are three hotels under contract that will change hands before March ends and six more set to swap in May or June.

"It's really been much better than we originally thought," Steven A. Schafer, vice president of the locally based REIT, tells GlobeSt.com. The fiscal picture puts FelCor at $572 million in sales to date and sets it up to bank $720 million when it closes the book on the 45-hotel disposition. In all, the REIT is poised to pick up $70 million more than its midpoint disposition guidance.

Schafer says the portfolio will "be constantly reviewed" after the disposition ends, but the plan right now is to sit on the balance and renovate. To date, renovations have been done at eight hotels, with 72 to be finished this year and the remaining 11 in early 2008.

In this morning's earnings call, Richard Smith, president and CEO, says some renovations already are showing double-digit RevPAR increases. And the work that's been done so far has stayed on budget, he told analysts and stockholders.FelCor has undergone a series of personnel changes since Thomas J. Corcoran Jr. stayed on as chairman and turned over the president's reins to Smith. "Last year was all about making the changes, the planning, getting everything scheduled and getting direction and strategic planning done. And, 2007's all about executing it," Shafer stresses.

In the coming months, FelCor will hand over 2,601 hotel keys for roughly $148 million to hit the $720-million projection. Last year's sales, totaling 9,052 rooms, reeled in $514 million, with the last two sales ringing up another $58 million.

Still to be sold are four Embassy Suites: 130 rooms in Brunswick, GA; 279 rooms in Dallas' Park Central; 251 rooms in Auburn Hills, MI; and 244 rooms along Interstate 44 in Tulsa. The "to-go" list includes the 438-room Sheraton, also in Dallas' Park Central neighborhood; a 155-key Sheraton in Lexington, KY; 309-key Hampton Inn in Dallas' West End and near the convention center; 415-room Holiday Inn at the Bush Intercontinental Airport; 380-room Holiday Inn Select in Stamford, CT.