RLJ Lodging Trust (RLJ) is a self-advised, publicly traded real estate investment trust focused on acquiring premium-branded, focused-service and compact full-service hotels. The Company’s portfolio consists of 145 hotels in 21 states and theDistrict of Columbia, with a total of more than 21,600 rooms. RLJ is a great growth and income stock as it is projected to increase EPS by 19% in 2013 while paying a steady 3.6% dividend yield.
The Company recently announced that it acquired the historicHumble Oil Buildingcomplex in downtownHouston, for a purchase price of$79.5 million, or approximately$151,000per key based on a combined forward room count of 528 keys.
The Humble Oil Buildingis a three-tower complex that occupies an entire city block in downtownHouston. The complex consists of an 82-unit apartment tower that will be converted to a 166-room SpringHill Suites and two existing hotels, the existing 191-roomCourtyard Houston Downtown Convention Center(“the Courtyard”) and the 171-roomResidence Inn Houston Downtown Convention Center(“the Residence Inn”). The purchase price represents a forward capitalization rate of approximately 10.1% for the Courtyard and 9.5% for theResidence Innbased on each hotel’s projected 2013 net operating income and applicable purchase price allocation. The Company purchased this portfolio of assets with its revolving credit facility.
“Our ability to execute this off-market transaction required the expertise, experience, and relationships that are unique to RLJ,” commentedThomas J. Baltimore, Jr., President and Chief Executive Officer. “Acquiring theHumble Oil Buildingcomplex represents a value-add opportunity. Both existing hotels have notable upside potential and our extensive experience managing complex renovations will enable us to deliver another conversion property that will help drive economies of scale.”
Adjusted FFO for the three months ended December 31, 2012, increased $13.4 million to $50.7 million, representing a 35.9% increase over the comparable period in 2011. For the twelve months ended December 31, 2012, Adjusted FFO increased $43.5 million to $185.6 million, representing a 30.6% increase over the comparable period in 2011. Adjusted FFO per diluted share and unit for the three and twelve months ended December 31, 2012, was $0.48 and $1.74, respectively, based on the Company’s diluted weighted-average shares and units outstanding of 106.8 million and 106.6 million for each period, respectively.
Net income attributable to common shareholders for the three months ended December 31, 2012, was $13.7 million, compared to a loss of $1.3 million in the comparable period in 2011. For the twelve months ended December 31, 2012, net income attributable to common shareholders was$41.3 million, compared to$11.3 million for the comparable period in 2011.
First Call consensus has the company producing $2.08 in EPS in 2013 which is a 19% increase from the prior year. EPS are projected to be $2.34 in 2014 which is a nice 12% increase from 2013. First Call Analyst currently have a buy rating with a 2.0 rating. RLJ has an equity summary score of 7.2 out of 10 for a Bullish outlook. The stock is currently trading near $22.50, 10.8 times 2013 EPS and 9.6 times 2014 EPS.