While CorePoint Lodging continues to work toward its goal to reach a core portfolio of 105 hotels through asset sales, President and CEO Keith Cline said there is an opportunity for the midscale-focused real estate investment trust to "become a consolidator" down the road.
During a video interview with Hotel News Now, Cline said CorePoint's core portfolio "continues to materially outperform the noncore portfolio," which is why it is "focused very intently on working through those sales."
On the company's fourth quarter and full-year 2020 earnings call, executives said CorePoint has sold a total of 113 noncore hotels for $489 million since March 2019, which is when the initial disposition program started.
In that initial phase, 71 of 78 noncore assets were sold for $283 million. Phase two began in March 2020, and 42 of 132 noncore assets have been sold for $206 million, so far.
While CorePoint has been focused on selling assets over the last 18 months, Cline said that "doesn't remove the opportunity that's always been there to become a consolidator."
If the company were to grow its portfolio, he said a piece of that strategy would be to "diversify brands and loyalty program participation, as well as diversify management companies because we don't want to be too concentrated to either one manager or one brand."
Since spinning off from La Quinta Holdings when the company was acquired by Wyndham Hotels & Resorts in 2018 and transforming into a standalone real estate investment trust, CorePoint's portfolio has been made up exclusively of La Quinta properties managed by Wyndham.
"Diversifying as we grow would absolutely be a big part of [the acquisition strategy], but in the meantime, we certainly have an excellent strategy right now that's driving shareholder value through our disposition program," he said.
Shareholders understand the value of CorePoint's disposition program given that they understand the company's real estate, Cline said.
"If you look at the values we are obtaining on our disposition strategy, while we also shrink the portfolio down to a core portfolio that materially outperforms the noncore, it really is a great story of transforming a business in a relatively short period of time," he said.
CorePoint continues to communicate the value creation of this strategy to its shareholders, he said.
"A lot of people understand the value proposition of what we’re driving through our real estate strategy," he said. "The environment has been a little strange in the past year, but certainly the growth opportunity for this business if we would decide to pivot and start to grow is still there and will remain to be there.”
Watch the video above to hear more from Cline on CorePoint's disposition strategy and performance throughout the pandemic.
This video was recorded on March 16, 2021, by HNN's Danielle Hess.