12/22/2015 | By Sarah Borchersen-Keto
Richard Smith, president and CEO of FelCor Lodging Trust, Inc. (NYSE: FCH), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.
In September, FelCor sold the final hotel in its disposition program. Since that time, the company has said it would make opportunistic asset sales. Smith explained the strategy.
“It’s really to create capacity as we move through the cycle and open up the use of proceeds for things that will be higher yielding,” he said.
Smith noted that FelCor holds a handful of assets that are high in value, but are not yielding enough. Selling these assets will allow FelCor to deploy those funds into something that creates more value for shareholders, Smith said.
Turning to FelCor’s flagship New York property, The Knickerbocker, Smith said the focus right now is on correctly positioning the hotel.
“It’s a very high-end hotel. We have to be careful to mix the customer segments correctly to keep rate where it needs to be and more slowly build occupancy. The rate is positioned very well right now, but it will take a while for the occupancy to ramp up,” Smith said.
Smith predicted that from an earnings perspective, it will take until 2017 to stabilize the hotel.
Meanwhile, Smith stressed that FelCor has additional internal investment opportunities. He cited eight to 10 redevelopment projects that could create “dramatic value.” One example is the possible redevelopment of FelCor’s Wyndham Santa Monica at the Pier, he noted.
“The great thing about our story is that we’ve been able to create more value than our peers because we had so much to do. That was true during the defense and clean-up portion of the turnaround, but it’s even true now,” he said.