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Report: FelCor Lodging in early talks for outright sale

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Report: FelCor Lodging in early talks for outright sale

FelCor Lodging Trust Inc. is weighing a company sale and is in discussions with potential acquirers, The Wall Street Journal reported, citing people with knowledge of the matter.

The unnamed sources told the publication that the discussions are in early stages and are not guaranteed to result in a sale or another transaction. As of the afternoon of Jan. 25, the hotel REIT had a roughly $1 billion market cap.

In January 2016, Jonathan Litt called on FelCor to consider selling its New York properties in order to generate cash to pare debt and be distributed to stockholders. The activist investor said at the time that the REIT's property value was almost $1.5 billion, which, if taken into account, could put a potential deal's enterprise value nearer to $3 billion, the Journal noted.

In February of that year, FelCor reached a deal with Litt's Land & Buildings Investment Management LLC that involved the addition of two independent directors to the REIT's board.

Later in October, another activist shareholder, Snow Park Capital Partners LP, urged FelCor's board to explore a company sale and allow shareholders to vote on a liquidation. The REIT's executives, however, refused to discuss such sale calls during the company's earnings call in November.

A team of analysts at SunTrust Robinson Humphrey said in a note that they believe the timing of the rumored sale talks is right. "Reading between the lines on the most recent earnings call, we had suspected every option to 'unlock value' was on the table. This combined with a company without a CEO ... suggests that a sale of the company is one of the options being explored," the analysts said in a note.