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RLJ Lodging and FelCor to Merge into a $7 Billion REIT

RLJ Lodging and FelCor to Merge into a $7 Billion REIT

BETHESDA, Md. – RLJ Lodging Trust and FelCor Lodging Trust Incorporated announced a merger agreement under which FelCor will merge with and into a wholly-owned subsidiary of RLJ in an all-stock transaction. The merger will create the third largest pure-play lodging REIT with a combined enterprise value of $7 billion, and the largest pure-play public REIT dedicated to owning focused-service and compact full-service hotels.

The combined company will have ownership interests in 160 hotels across 26 states and the District of Columbia under the Marriott, Hilton, Hyatt and Wyndham flags – totaling 31,467 rooms. The combination company’s hotels will be located primarily in urban and coastal markets with multiple demand generators. The combination also provides significant penetration within key high-growth markets, including California, Florida, and Boston.

“We are truly excited about this unique opportunity as we transform our two companies into one of the largest pure-play lodging REITs,” said Ross H. Bierkan, RLJ’s President and Chief Executive Officer. “In addition to being immediately accretive to our RevPAR, merging with FelCor expands our geographic footprint in highly-desirable markets on the West Coast, while strengthening our presence in other coastal markets in the East and the South.”

“We are very pleased to combine with RLJ Lodging Trust to create a leading lodging REIT that is positioned for significant long-term growth,” said Steven R. Goldman, FelCor’s Chief Executive Officer. “This merger creates a company that has greater reach in key markets with a streamlined operating structure and more advantageous cost of capital.”

The merger will be immediately accretive to RLJ’s RevPAR with Pro forma 2016 RevPAR increasing 5.4% to $137. The elimination of duplicate corporate general and administrative costs is expected to save $22 million. The combined company is also expected to benefit from long-term, property level savings in the areas of energy/utility contracts, insurance and furniture, fixture and equipment procurement.

The combined company will continue to be led by Robert L. Johnson as Executive Chairman, Ross H. Bierkan as President and Chief Executive Officer, and Leslie D. Hale as Chief Operating Officer and Chief Financial Officer. Upon completion, the company’s headquarters will remain in Bethesda, Maryland.

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