ORLANDO, Fla., Aug. 5, 2016 — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the quarter ended June 30, 2016.
Second Quarter 2016 Highlights
- Net Income: Net income attributable to common stockholders was $25.8 million and net income per share was $0.24.
- Same-Property RevPAR: Same-Property RevPAR increased 1.8% from the second quarter of 2015 to $162.47, as occupancy remained flat and ADR increased 1.8%. Excluding hotels located in Houston, Same-Property RevPAR increased 3.8% from the second quarter of 2015, as occupancy increased 63 basis points and ADR increased 3.0%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 36.3%, an increase of 115 basis points from the same period in 2015.
- Total Portfolio RevPAR: Total portfolio RevPAR was 8.3% higher than in the second quarter of 2015, reflecting portfolio performance, as well as changes in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA increased $7.7 million to $88.0 million, an increase of 9.6% over the second quarter of 2015.
- Adjusted FFO per Diluted Share: Adjusted FFO available to common stockholders increased to $0.65 per diluted share compared to $0.57 per diluted share for the second quarter of 2015, an increase of 14.0%.
- Transaction Activity: During the quarter, the Company completed the sale of four hotels for a gross price of $136 million.
- Financing Activity: In June, the Company paid off one $22 million mortgage loan.
- Dividends: The Company declared its second quarter dividend of $0.275 per share to common stock and unit holders of record on June 30, 2016.
Year to Date Results
For the six months ended June 30, 2016, net income attributable to common stockholders was $17 million, a 90.0% increase over the same period prior year, due largely to one-time separation and other start-up related expenses in 2015, offset by the provision for asset impairment and loss on debt extinguishment incurred during 2016. Same-Property RevPAR increased 1.3% from the first half of 2015 to $151.54, as occupancy declined 79 basis points and ADR increased 2.4%. The Company's Same-Property Hotel EBITDA margin was 33.3%, which improved 26 basis points compared to the same period prior year. The Company's Adjusted EBITDA and Adjusted FFO per diluted share increased 3.7% and 5.9%, respectively, during the first half of 2016 as compared to the same period in 2015.
"We continue to be focused on our strategy of owning and further improving a high-quality, diversified portfolio of hotels, executing our differentiated approach to portfolio management and maintaining a strong financial profile," said Marcel Verbaas, President and Chief Executive Officer of Xenia. "While the dynamics in the Houston market continue to be unfavorable, we were able to generate 1.8% Same-Property portfolio RevPAR growth in the second quarter, as our Same-Property portfolio excluding our Houston area assets achieved a healthy 3.8% RevPAR increase. Our continued efforts to contain costs and optimize our portfolio through unique property initiatives resulted in margin growth of 115 basis points during the quarter, in part due to refunds related to real estate tax appeals. We will maintain our focus on cost control and revenue enhancement opportunities as we look cautiously into the second half of the year and anticipate a period of relatively muted RevPAR growth."
"We are particularly pleased with our acquisition and disposition efforts to improve our portfolio over the past year, as demonstrated by the fact that total portfolio RevPAR during the second quarter exceeded prior year by 8.3%. We have been able to achieve this while further strengthening our balance sheet, resulting in a net senior capital to EBITDA ratio that is among the lowest of our peer group," Mr. Verbaas continued. "The completion of nearly $310 million of dispositions since last fall has allowed us to maintain this conservative leverage profile, while also providing us with the ability to return capital to our investors through the execution of our share repurchase program. The fact that we were able to sell six hotels on the lower end of the portfolio at a weighted average multiple of 10.8x 2015 EBITDA speaks to the value of our portfolio, particularly when taking into account that this excludes approximately $90 million of total near-term capital investments that we were able to avoid as a result of these dispositions. Adjusted for this required near-term capital, the combined sales price represented a 13.9x 2015 EBITDA multiple."
Operating Results
The Company's results include the following:
Three Months Ended June 30,
Six Months Ended June 30,
2016
2015
Change
2016
2015
Change
($ amounts in thousands, except hotel statistics and per share amounts)
Net income attributable to common stockholders
$
25,768
$
23,739
8.5
%
$
16,851
$
8,869
90.0
%
Net income per share available to common stockholders
$
0.24
$
0.21
14.3
%
$
0.15
0.08
87.5
%
Same-Property Number of Hotels
43
43
—
43
43
—
Same-Property Number of Rooms
11,199
11,194
5
11,199
11,194
5
Same-Property Occupancy
80.0
%
80.1
%
(1 bps)
76.2
%
77.0
%
(79 bps)
Same-Property Average Daily Rate
$
202.96
$
199.30
1.8
%
$
198.77
$
194.20
2.4
%
Same-Property RevPAR
$
162.47
$
159.55
1.8
%
$
151.54
$
149.59
1.3
%
Same-Property Hotel EBITDA(1)
$
86,799
$
83,342
4.1
%
$
150,241
$
147,818
1.6
%
Same-Property Hotel EBITDA Margin(1)
36.3
%
35.1
%
115 bps
33.3
%
33.0
%
26 bps
Total Portfolio Number of Hotels(2)
46
46
—
46
46
—
Total Portfolio Number of Rooms(2)
11,594
12,643
(1,049)
11,594
12,643
(1,049)
Total Portfolio RevPAR(3)
$
162.72
$
150.19
8.3
%
$
150.53
$
142.44
5.7
%
Adjusted EBITDA(1)
$
87,997
$
80,284
9.6
%
$
150,529
$
145,118
3.7
%
Adjusted FFO(1)
$
70,249
$
63,870
10.0
%
$
117,328
$
114,763
2.2
%
Adjusted FFO per diluted share(1)
$
0.65
$
0.57
14.0
%
$
1.08
$
1.02
5.9
%
(1) See tables later in this press release for reconciliations from net income to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA, Funds From Operations ("FFO"), Adjusted FFO, and Same-Property Hotel EBITDA. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, Adjusted FFO per diluted share, Same-Property Hotel EBITDA, and Same-Property Hotel EBITDA Margin are non-GAAP financial measures.
(2) As of end of periods presented.
(3) Results of all hotels as owned during the periods presented, including the results of hotels sold or acquired for the actual period of ownership by the Company.
"Same-Property" results include the results for all hotels owned as of June 30, 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 the 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 Santa Barbara, 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.
Disposition Activity
As previously disclosed, in April the Company sold the DoubleTree by Hilton in Washington DC for a sale price of $65 million, and in May, the Company sold the Embassy Suites Baltimore Hunt Valley for a sale price of $20 million.
In June, the Company completed the sale of the 287-room Marriott Atlanta Century Center / Emory Area in Atlanta, Georgia and the 226-room Hilton Phoenix Suites in Phoenix, Arizona for a combined sale price of $50.8 million, inclusive of $4.5 million of capital in the hotels' reserve accounts which was acquired by the buyer.
Proceeds from dispositions will be utilized for general corporate purposes which may include share repurchases under the Company's existing 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.
"We are pleased with the continued successful execution of our previously announced plan to selectively dispose of, and harvest value from, lower-quality assets in the portfolio that no longer fit our target criteria. During the quarter, we completed four dispositions for over $136 million at a weighted average EBITDA multiple of 10.4x, based on TTM EBITDA as of the end of the first quarter, excluding near-term capital requirements. Each of the hotels required significant near-term capital investments, collectively totaling nearly $60 million, none of which we felt to be a prudent use of our capital. Adjusting for this capital, the sale price represents a 14.9x weighted average TTM EBITDA multiple as of the end of the first quarter. On average, these hotels generated RevPAR that was more than 25% below the remainder of the portfolio, demonstrating our continued focus on quality and the improvement of our overall portfolio," commented Mr. Verbaas.
Balance Sheet
In June 2016, the Company paid off the $22 million mortgage loan collateralized by the Courtyard Pittsburgh Downtown.
As of June 30, 2016, the Company had total outstanding debt of $1.3 billion with a weighted average interest rate of 3.49%. In addition, the Company had $278 million of cash and cash equivalents and full availability on its $400 million senior unsecured credit facility. Total net debt to trailing 12 month Corporate EBITDA (as defined in Section 1.01 of the Company's senior unsecured credit facility) was 3.6x.
Capital Expenditures
During the second quarter, the Company invested $13 million in its portfolio. The Company completed the guestroom renovation, the new resort-style pool, and the outdoor function space at the 275-room Marriott Napa Valley Hotel & Spa, and made significant progress on the meeting room and ballroom renovation at the Renaissance Atlanta Waverly Hotel & Convention Center. The Company also added two keys to the inventory at the Hyatt Key West Resort & Spa as a result of the relocation of the spa at the hotel.
For the six months ended June 30, 2016, the Company invested over $20 million in its portfolio. Several significant capital projects are scheduled to commence during the second half of the year, including guestroom renovations at the Andaz San Diego, the Hyatt Key West Resort & Spa, and the Westin Galleria Houston.
To view full financial release and corresponding tables please click the PDF icon or visit:
http://investors.xeniareit.com/CorporateProfile.aspx?iid=4552942
