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Shares of
FelCor Lodging Trust Incorporated, a real estate investment trust entity that owns a portfolio of upper-upscale and luxury hotels and resorts, surged higher by more than 7 percent on Thursday after an activist investor
detailed a plan that could unlock significant shareholder value.
Land and Buildings, a registered investment manager that specializes in publicly traded real estate and real estate related securities, released an investor presentation on FelCor Lodging.
Land and Buildings argued that FelCor Lodging Trust is "at a crossroads" as its stock has lost approximately 50 percent from its 2015 highs and continues to trade "well below current private market real estate value taking into account real-time market conditions." As such, the company should "pursue a value-enhancing strategy that will significantly lower leverage, increase NAV per share and crystalize value through a sale of all or part of the Company."
Specifically, the activist investor suggested the company sell its New York City hotels, sell the bottom 10 percent of its portfolio to improve portfolio quality, buy back its own stock, reduce net debt through asset sale proceeds, and enhance corporate governance by "de-staggering" the Board of Directors and add new directors.
Land and Buildings argued its plan could drive FelCor Lodging's shares higher by 60 percent.
"Land and Buildings believes that FelCor Lodging Trust is uniquely positioned in the hotel REIT sector to outperform and close the substantial gap between its share price and net asset value," said Jonathan Litt, Land and Buildings Founder and Chief Investment Officer. "The Company's suburban, airport and resort locations are insulated from elevated supply growth in the gateway markets, positioning the Company for superior growth compared to its lodging REIT peers in 2016."
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Posted In: Hedge FundsGeneralFelCor Lodging TrustJonathan LittLand and Buildingsreal estate investment trustREIT
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