1-Tues
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Based in Bethesda, Maryland RLJ Lodging Trust (proposed RLJ) is scheduling an $550 million IPO with a market capitalization of $2060 million at a price-range mid-point of $20 for Wednesday May 11, 2011 |
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SUMMARY |
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Hotel REIT that expects to distribute 70% of cash available for distribution for the year ending December 31, 2011, for a 3% yield. |
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VALUATION |
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. Based on distributing only 70% of available cash for distribution, looks like there is sufficient room for an increase in cash distribution
. Priced at 1.1 times book value, at the price range mid-point of $20.
. Other hotel REITs, however, have a higher yield. For example: Hospitality Prop (HPT) yields 7.7%; Chatham Lodging (CLDT) yields 4.1% and .Summit Hotel (INN) yields 4%
. In the last six months those three stocks have had price changes of, respectively, -3%, -7% and +13% (INN IPO’d February 8, 2011) |
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Expected 2011 |
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Valuation Ratios |
IPO Mrkt |
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yr yield on |
Price / |
Price / |
% offered |
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Annualizing Dec 2010 qtr |
Cap (mm) |
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IPO price |
BookValue |
TangibleBV |
in IPO |
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RLJ Lodging Trust |
$2,060 |
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3.0% |
1.1 |
1.1 |
27% |
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BUSINESS |
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Self-advised and self-administered Maryland real estate investment trust, which invests primarily in premium-branded, focused-service and compact full-service hotels. |
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Upon completion of the IPO will own 140 hotels in 19 states and the District of Columbia comprising over 20,400 rooms. |
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Will be one of the largest U.S. publicly-traded lodging REITs in terms of both number of hotels and number of rooms. Initial hotels are concentrated in urban and dense suburban markets that RLJ believes exhibit multiple demand generators and high barriers to entry. |
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DISTRIBUTIONS |
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Expected distributions represent 70% of estimated cash available for distribution to our common shareholders for the 12-month period ending December 31, 2011. |
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Page 54 http://www.sec.gov/Archives/edgar/data/1511337/000104746911004242/a2203502zs-11a.htm#cu16201_use_of_proceeds |
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USE OF IPO PROCEDS |
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$505 million to repay debt |
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RLJ Lodging Trust REIT |
RLJ, C+, 7 |
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Post IPO shares: 103mm |
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Lodging REIT |
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Proforma |
Esimated |
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Bethesda, MD |
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year end |
year end |
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IPO Mkt |
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2010 |
2011 |
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Cap (mm) |
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proforma EBITDA ($mm)* |
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$207 |
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$2,060 |
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proforma ads FFO ($mm)* |
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$127 |
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@$20 |
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(Funds From Operations) |
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*page 60 in S-1 filed April 29 |
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Est cash flow from operations** |
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$129 |
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Est cash for distribution** |
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$89 |
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Intended initial distribution** |
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$62 |
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Estimated % distribution |
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70% |
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** page 54 S-1 filed April 29 |
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Expected 2011 |
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Valuation Ratios |
IPO Mrkt |
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yr yield on |
Price / |
Price / |
% offered |
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Annualizing Dec 2010 qtr |
Cap (mm) |
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IPO price |
BookValue |
TangibleBV |
in IPO |
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RLJ Lodging Trust |
$2,060 |
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3.0% |
1.1 |
1.1 |
27% |
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Compare |
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Current annualized yield |
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Hospitality Prop (HPT) |
$2,890 |
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7.7% |
1.17 |
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Summit Hotel (INN) |
$411 |
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4.0% |
1.4 |
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Chatham Lodging (CLDT) |
$234 |
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4.1% |
0.94 |
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Sourece: Google Finance |
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Nov 5 |
May 5 |
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Stock price change |
2010 |
2011 |
% change |
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Hospitality Prop (HPT) |
$24.08 |
$23.42 |
-3% |
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Chatham Lodging (CLDT) |
$18.25 |
$16.96 |
-7% |
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Summit Hotel (INN) |
IPO date |
May 5 |
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Feb 8 |
2011 |
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$9.75 |
$11.01 |
13% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
2 |
2 |
1 |
7 |
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