IRVING, TX-Management of FelCor Lodging Trust indicated that, during its Q2 earnings conference call, its asset sale program is on track, and is actually ahead of schedule. The reason? “The buyers of our hotels are finding financing,” commented Richard A. Smith, FelCor’s president and CEO. “It’s one of the reasons we’re ahead of schedule on the process.”
The company, which owns predominantly upscale hotels and resorts, has sold six hotels so far in 2011, with three (Embassy Suites Hotels in Orlando, at Dallas-Fort Worth airport and in Corpus Christi, TX) closing in July. Gross proceeds of the July sale were $46 million and, combined with earlier sales, gross proceeds exceeded $100 million. Proceeds from the sales are being used to pay debt and to boost the company’s portfolio quality through acquisition of new hotels and resorts. In May 2011, FelCor purchased the Royalton and Mortans hotel in midtown Manhattan for $140 million.
Smith told investors and analysts that five assets continue to be actively marketed, with one under contract, though not a hard. “The other four are close,” he added, “though there is still due diligence once they’re under.” FelCor will bring more hotels to market, and that could take place as early as this September,” Smith added.
In the meantime, FelCor continues investing in capital improvements, having spent $36.3 million so far. The plan is to spend a total of $85 million in 2011 on capital improvement and return-on-investment products. Approximately $60 million, or 6% of the revenue, will be used to renovate seven hotels.
Another piece of good news for FelCor, Smith noted, is that “corporate transient growth continues to be robust,” and that demand for long-term lodgings are likely to continue on the upswing. “We expect RevPar growth to be somewhat bumpy,” he added, “but this recovery seems to be on track.
The RevPAR on FelCor’s balance sheet increased 6.2% during Q2, year over year, for 67 comparable hotels, while same-store EBITDA margins increased by 144 basis points. Hotel EBITDA, in the meantime, increased 11% during the quarter, which represented more than two times hotel revenue growth.
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