The Corporate Restructuring Report-La Quinta Holdings Inc. (LQ) & CorePoint Lodging Inc. (CPLG)
On May 30th, 2018, La Quinta Holdings Inc. completed the spin-off of its real estate assets into a separate public company, CorePoint Lodging Inc (CPLG). The parent retained the hotel franchise and management business and merged with Wyndham Worldwide Corporation. Post-merger, La Quinta ceased to trade on the NYSE and became a wholly-owned subsidiary of Wyndham Hotels & Resorts Inc. The spin-off was taxable and announced on January 18, 2017. The spin-off is in line with similar steps taken by other peers in the industry. It makes sense as it simplifies the business structure by shedding high-cost, debt-laden real estate assets into another company.
CPLG is the only publicly-traded US lodging REIT focused on serving the attractive midscale and upper-midscale select-service lodging rsegments which experience relatively less RevPar volatility and higher growth. Presence in US states with strong economic fundamentals and strong growth potential should benefit occupancy rate as well as RevPar growth. CPLG's strong margin profile and stable cash flows provide enough flexibility to target tuck-in acquisitions, which in our view should further bolster revenue growth. Looking into 2018, we expect the renovation and repositioning of ~50 hotels coupled with hurricane-impacted hotel rooms coming back to provide tailwind to the topline.
La Quinta, post-merger, is part of the largest hotel franchiser in the world, Wyndham Hotels & Resorts Inc La Quinta will boost Wyndham's presence in he midscale and upper-midscale categories. Robust pipeline of ~259 hotels, representing inventory of 24,000 rooms, provides ample room for Wyndham to tap into for growth opportunities.
In our view, CPLG is undervalued. Post-spin and merger, La Quinta ceased to trade on the NYSE and as such we do not have a rating on it.
La Quinta Holdings is a holding company. Through its subsidiaries, the company is engaged as an owner, operator and franchisor of select-service hotels under the La Quinta brand. The company operates its business in two segments: owned hotels, which operates owned hotel properties located in the U.S; and franchise and management, which is engaged in licensing, franchising and managing agreements relating to its owned and franchised hotels. As of Dec 31 2016, the company's portfolio consisted of 888 hotels representing approximately 87,200 rooms located primarily in 48 states across the U.S, as well as in Canada, Mexico, Honduras and Colombia, of which 322 hotels were owned and operated and 566 were franchised.
WhiteSand Research, LLC is a minority-owned company offering research solutions to the financial industry, including institutional investors, hedge funds, and investment firms. Founded in 2006 as a boutique research group, we focus on proprietary research reports on publicly-traded companies facing event-driven catalysts, including mergers and acquisitions, corporate buyback situations, turnarounds, spin-offs, post-bankruptcies and capital restructurings.
Producing quality, in-depth, and unbiased research to help our client's shape their investment processes has been the cornerstone of our company's success. WhiteSand Research employs a value-oriented, event-driven investment strategy that seeks to capitalize on the most inefficient and attractive investment opportunities.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.