BETHESDA, Md.–RLJ Lodging Trust (the “Company”) (NYSE:RLJ) today announced that the Company has sold the 364-room Sheraton Philadelphia Society Hill (“Sheraton Philadelphia”) in Philadelphia, PA for $95.5 million or approximately $262,000 per key.
“The sale of another non-core asset at a highly accretive valuation highlights the meaningful progress we have achieved in realizing the embedded value from the FelCor merger,” commented Ross H. Bierkan, President and Chief Executive Officer. “Not only is this disposition highly accretive on a valuation basis, but it is also accretive to our portfolio RevPAR and EBITDA margin. With this transaction, we have accomplished our initial goal of generating approximately $300 million from asset sales at an attractive aggregate multiple. We remain laser-focused on unlocking the embedded value within our portfolio through executing on our strategic initiatives. We continue to expect to execute on a second round of asset sales that will generate an additional $200 million to $400 million in proceeds this year.”
The transaction sale price represents a 14.7x multiple on the hotel’s 2017 EBITDA and approximately a 5.6% capitalization rate on the hotel’s 2017 net operating income, which excludes planned capital expenditures. The hotel EBITDA margin for the Sheraton Philadelphia was 28.0% in 2017, below the Company’s reported 33.1% EBITDA margin for the year. The hotel’s 2017 RevPAR was $119.12 compared with the portfolio average of $135.82.
The Company intends to apply the net proceeds from the sale to pay down its credit facility and for general corporate purposes.
