Based in Bethesda, Maryland, RLJ Lodging Trust [proposed ticker (RLJ)] is scheduling an $550 million IPO with a market capitalization of $2,060 million at a price-range mid-point of $20 for Wednesday May 11, 2011. Our full IPO calendar includes nine others for the week of May 9.
SUMMARY -- RLJ is a hotel REIT that expects to distribute 70% of cash available for distribution for the year ending December 31, 2011, for a 3% yield.
VALUATION -- Based on distributing only 70% of available cash for distribution, it looks like there is sufficient room for RJL to increase cash distributions. RJL is priced at 1.1 times book value, at the price range mid-point of $20.
In the last six months, those three stocks have had price changes of the following: HPT, -3%; CLDT, 7%; and INN +13%. INN IPO’d on February 8, 2011.
BUSINESS -- RLJ is a self-advised and self-administered Maryland real estate investment trust, which invests primarily in premium-branded, focused-service and compact full-service hotels. Upon completion of the IPO RLJ will own 140 hotels in 19 states and the District of Columbia comprising over 20,400 rooms.
RLJ will then 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.
DISTRIBUTIONS -- RLJ expected distributions represent 70% of estimated cash available for distribution to our common shareholders for the 12-month period ending December 31, 2011. S-1 Page 54
USE OF IPO PROCEDS -- $505 million to repay debt.