ORLANDO, Fla., May 11, 2016 — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the quarter ended March 31, 2016.
First Quarter 2016 Highlights
- Same-Property RevPAR: Same-Property RevPAR increased 0.9% from the first quarter of 2015 to $138.71, as occupancy declined 145 basis points and ADR increased 2.9%. Excluding Houston, Same-Property RevPAR increased 3.0% from the first quarter 2015, comprised of an increase in ADR of 3.6% and a decline in occupancy of 40 basis points.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 29.9%, a decrease of 71 basis points from the same period in 2015.
- Total Portfolio RevPAR: Total portfolio RevPAR increased 3.1% from the first quarter of 2015 reflecting portfolio performance, as well as changes in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA decreased $2.2 million to $62.6 million, a decline of 3.4% over the first quarter of 2015.
- Adjusted FFO per Share: Adjusted FFO available to common stockholders decreased to $0.43 per share compared to $0.45 per share for the first quarter of 2015, representing a decrease of 4.4%, partially due to an increase in income taxes of approximately $1.5 million after taking into account the adjustment made during the first quarter of 2015 for the effect of $2.9 million in non-recurring income tax expense on a restructuring gain in connection with our spin-off.
- Net Loss: Net loss was $8.9 million and loss per share was $0.08.
- Acquisition Activity: In January, the Company completed the previously announced acquisition of the 245-room Hotel Commonwealth in Boston, Massachusetts for a purchase price of $136 million.
- Disposition Activity: In February, the Company completed the sale of its 248-room Hilton University of Florida Conference Center Gainesville in Gainesville, Florida for a sale price of $36 million. In connection with the sale, the Company paid off the $27.8 million loan collateralized by the hotel.
- Financing Activity: The Company funded its $125 million, 7-year term loan. In addition, the Company obtained one new mortgage loan and refinanced one existing mortgage loan for a total of $120 million.
- Dividends: The Company declared its first quarter dividend of $0.275 per share to stockholders of record on March 31, 2016, a 20% increase from the Company's previous quarterly dividend.
"Our Same-Property portfolio, excluding our Houston hotels, reported RevPAR growth of 3.0%, which was driven primarily by strong performance at our California assets. While March results reflected an impact from the shift in the timing of Easter relative to the prior year, the second quarter is off to a strong start with Same-Property April RevPAR, including our Houston assets, up approximately 5%," said Marcel Verbaas, President and Chief Executive Officer of Xenia.
"Despite the challenging first quarter that we anticipated, we are confident in our outlook for the full-year due to healthy group business trends and continued ramp-up from recent renovations and new developments. We are focused on revenue management, expense controls and prudent capital allocation as evidenced by our recent dispositions, share repurchases and financing activities."
Operating Results
The Company's results include the following:
Three Months Ended March 31,
2016
2015
Change
($ amounts in thousands, except hotel statistics and per share amounts)
Same-Property Number of Hotels
47
47
Same-Property Number of Rooms
12,153
12,146
7
Same-Property Occupancy
72.5
%
73.9
%
(145)
bps
Same-Property Average Daily Rate
$
191.34
$
186.01
2.9
%
Same-Property RevPAR
$
138.71
$
137.53
0.9
%
Same-Property Hotel EBITDA(1)
$
67,299
$
68,238
(1.4)
%
Same-Property Hotel EBITDA Margin(1)
29.9
%
30.6
%
(71)
bps
Total Portfolio Number of Hotels
50
46
4
Total Portfolio Number of Rooms
12,548
12,639
(91)
Total Portfolio RevPAR(2)
$
138.73
$
134.59
3.1
%
Adjusted EBITDA(1)
$
62,620
$
64,812
(3.4)
%
Adjusted FFO(1)
$
47,166
$
50,872
(7.3)
%
Adjusted FFO per share(1)
$
0.43
$
0.45
(4.4)
%
Net loss attributable to the Company
$
(8,915)
$
(14,866)
40.0
%
Net loss attributable to the Company per share
$
(0.08)
$
(0.13)
38.5
%
(1)
See tables later in this press release for reconciliations from net loss to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA, Funds From Operations ("FFO") and Adjusted FFO. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, Adjusted FFO per diluted share, Hotel EBITDA, and Hotel EBITDA Margin are non-GAAP financial measures.
(2)
Includes all properties as owned during periods presented.
"Same-Property" results include the results for all hotels owned as of March 31, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and Hotel Commonwealth, which underwent a significant expansion project in late 2015. "Same-Property" results include periods prior to the Company's ownership of the Canary Hotel, RiverPlace Hotel and Hotel Palomar Philadelphia, and exclude the NOI guaranty payment at the Andaz San Diego. Results include renovation disruption for multiple capital projects during the periods presented.
Acquisition and Disposition Activity
In January 2016, the Company completed the previously announced acquisition of the 245-room Hotel Commonwealth in Boston, Massachusetts for a purchase price of $136 million.
Also in January 2016, the Company completed the addition of three guest rooms at the Hyatt Regency Santa Clara. These rooms were added to the available hotel inventory on January 25, 2016.
As previously announced, in February 2016 the Company sold the 248-room Hilton University of Florida Conference Center Gainesville in Gainesville, Florida for a sale price of $36 million. In addition, the Company retained the balance of approximately $2 million in the hotel's capital expenditure reserve account. Upon sale, the Company paid off the $27.8 million mortgage loan collateralized by the hotel.
Financing Activity
In January 2016, the Company funded its $125 million, seven-year term loan to complete the acquisition of the Hotel Commonwealth. The term loan matures in October 2022 and bears an interest rate based on a pricing grid with a range of 170 to 255 basis points plus LIBOR, determined by the Company's pro forma leverage ratio. Based on the Company's pro forma leverage ratio, the current effective interest rate is LIBOR plus 190 basis points. Prior to funding, in December 2015 the Company executed forward interest rate swaps to fix LIBOR over the period of the loan at 1.83%. As a result, the current annual interest rate on the term loan is 3.73%.
Also in January 2016, the Company obtained a new $60 million, seven-year mortgage on the Hotel Palomar Philadelphia at a rate of LIBOR plus 260 basis points. Concurrent with the closing of the loan, the Company executed a swap to fix LIBOR over the period of the loan at a rate of 1.54%. As a result, the interest rate on the loan is fixed at 4.14% for its entire term.
In February 2016, the Company completed a refinancing of the $49 million, 5.82% fixed rate mortgage on the Grand Bohemian Hotel Orlando. The new $60 million loan has a ten-year term at a fixed annual interest rate of 4.53%.
In March 2016, the Company exercised its one-year extension option on the $34 million mortgage loan collateralized by the Marriott Griffin Gate Resort & Spa.
Capital Investments
During the first quarter, the Company invested $7.3 million in its portfolio. The Company made significant progress on the renovation of the 275-room Marriott Napa Valley Hotel & Spa, completing the 189-room North Wing guestroom renovation. The completion of the overall project is expected in the second quarter and includes the renovation of all the guestrooms and bathrooms, including 82 tub-to-shower conversions in the South Wing, the renovation of meeting and pre-function space, and a pool and outdoor function space transformation. The Company anticipates spending a total of approximately $12 million on the project.
Additionally during the first quarter, the Company began the $5.1 million meeting room and ballroom renovation at the Renaissance Atlanta Waverly Hotel & Convention Center. The Company also completed the renovation of the Mojito Bar and construction of a new spa at the Hyatt Key West Resort & Spa. The relocation of the spa created the opportunity to add two keys to the hotel's inventory in the second quarter.
The Company continues to anticipate spending between $62 and $72 million of capital on its portfolio in 2016. In addition to the renovations at the Marriott Napa Valley Hotel & Spa and Renaissance Atlanta Waverly Hotel & Convention Center, other major projects for the year include guestroom renovations at the Andaz San Diego, the Hyatt Key West Resort & Spa and the Westin Galleria Houston.
Balance Sheet
As of March 31, 2016, the Company had total outstanding debt of $1.3 billion with a weighted average interest rate of 3.52%. Total net debt to trailing 12 month pro forma Corporate EBITDA (as defined in the Company's senior unsecured credit facility) was 4.0x as of March 31, 2016. The Company had $160 million of cash and cash equivalents and full availability on its $400 million senior unsecured credit facility.
During the three months ended March 31, 2016, the Company purchased 3,390,500 shares under its $100 million share repurchase authorization, at a weighted average price of $14.54 per share, for an aggregate purchase price of $49.3 million.
Subsequent Events
In April 2016, the Company sold the 220-room DoubleTree by Hilton in Washington DC for a sale price of $65 million. The price represented a 15.7x multiple on the hotel's 2015 EBITDA and a 5.5% capitalization rate on 2015 net operating income. In addition, the Company retained the $3.1 million balance in the hotel's capital expenditure reserve account.
In May 2016, the Company sold the 223-room Embassy Suites Baltimore Hunt Valley for a sale price of $20 million. The price represented a 8.4x multiple on the hotel's 2015 EBITDA and a 10.4% capitalization rate on 2015 net operating income. In addition, the Company retained the $1.3 million balance in the hotel's capital expenditure reserve account.
Proceeds from both dispositions will be utilized for general corporate purposes which may include share repurchases under the Company's existing $100 million repurchase authorization, debt repayments and potential acquisitions consistent with the Company's long-term strategy of investing in high-quality assets primarily located in top 25 lodging markets and key leisure destinations.
Through May 4, 2016, the Company repurchased a total of 3,797,969 shares of common stock at a weighted average price of $14.61 per share, for total consideration of $55.5 million. As of May 4, 2016, the Company had approximately $44.5 million remaining under its share repurchase authorization.
"We continue to selectively dispose of assets that no longer fit our investment criteria and/or require capital expenditures which we do not believe to be a prudent allocation of capital," stated Mr. Verbaas. "We are pleased with our previously disclosed sale of the DoubleTree Washington DC at an attractive valuation, allowing us to harvest value from an asset in need of significant near-term capital to capture potential future revenue growth. Additionally, the sale of the Embassy Suites Hunt Valley, a suburban hotel on the low end of the quality spectrum of our portfolio, is another example of our ability to monetize non-core assets with upcoming capital needs. Since October 2015, we have sold four hotels for approximately $260 million, with a weighted average RevPAR and weighted average EBITDA per key that are approximately 20% and 35%, respectively, below the remainder of our portfolio, at a total valuation of 11.7x 2015 EBITDA. Our transactional experience and expertise has allowed us to further strengthen our balance sheet and accretively repurchase shares, consistent with our previously outlined strategy."
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