FelCor Lodging Trust Incorporated FCH, the Irving, TX-based real estate investment trust (“REIT”), priced the public offering of 16 million common shares at $11.25 per share. The company also granted the underwriters a 30-day option to buy a maximum of 2.4 million additional common shares. The company intends to use the proceeds for redemption of preferred stocks as well as depository shares.
After excluding the underwriting discounts, commissions and related expenses, net proceeds from this offering are expected to be around $172.6 million. These funds will be utilized for redemption of 8% Series C Cumulative Redeemable Preferred Stock and related depositary shares. This aim is in sync with the company’s strategy to boost its balance sheet, lower leverage, augment returns on investment and enhance its portfolio quality. FelCor plans to utilize the remaining proceeds for investment in future redevelopment projects and other growth opportunities.
Last month, FelCor divested Embassy Suites Hotel – San Antonio Airport. Vending the 261-room hotel for $29.5 million, the company intended to use the proceeds for reducing its outstanding debt.
FelCor owns a diversified portfolio of primarily upper-upscale and luxury hotels located in major resort markets throughout the U.S. Measures like the latest public offering are likely to enhance the quality of its portfolio, which will, in turn, strengthen the company’s financial position.
FelCor currently carries a Zacks Rank #3 (Hold).
Better-ranked equity REITs include Ryman Hospitality Properties, Inc. RHP, CareTrust REIT, Inc. CTRE and CoreSite Realty Corporation COR. All these stocks sport a Zacks Rank #1 (Strong Buy).
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