RLJ Lodging Trust Preferred: Consistency Even In Troubled Times


  • Due to disinvestments, smart revenue generation, and reduced staffing cost, RLJ was able to sail through the pandemic, and pay preferred dividends.
  • On the back of increasing demand for business revenues and huge growth in leisure revenues, RLJ’s RevPAR and ADR have almost touched the 2019 level.
  • RLJ’s preferred shares, RLJ.PA, has consistently generated a yield in excess of 7 percent. These shares are perpetual, convertible, and not callable.
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Due to the covid-19 pandemic, the hotel industry faced a recession for almost 2 years, and has only just started recovering. Luckily, cash generated from disinvestments just prior to the pandemic enabled RLJ Lodging Trust (RLJ) to cover its operating losses, pay its debt obligations as well as dividends to its preferred shareholders. RLJ’s preferred shares, RLJ Lodging Trust CUM CONV PFD A (NYSE:NYSE:RLJ.PA) have consistently generated a yield in excess of 7 percent. These preferred shares are convertible, but not callable. These preferred shares are also perpetual, meaning that the investors are quite secured in their annual income, provided that the REIT generates enough funds.

RLJ Lodging Trust

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust (REIT) that owns primarily focused-service and compact full-service hotels. Its portfolio consists of premium-branded, high-margin hotels like Marriott, Hilton, and Hyatt brand names. These hotels are concentrated in urban areas, dense suburban markets, and business districts within various metropolitan areas in various parts of the United States. RLJ expects to generate almost $25 million through brand equity and amendments in management agreement, resulting in revenue enhancements.

It generates its revenue mainly from hotel operations, which is composed of the sale of rooms, food, and beverages. The Company’s portfolio consists of 103 hotels with approximately 22,570 rooms, and an ownership interest in one unconsolidated hotel with 171 rooms. RLJ’s operating performance is mainly driven by business travel, citywide attendance and leisure demand, particularly in the urban markets. Urban hotels represent two-thirds of RLJ’s ‘earnings before interest taxes depreciation and amortization’ (EBITDA).