ORLANDO, Fla., Nov. 7, 2016 — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the quarter ended September 30, 2016.
Third Quarter 2016 Highlights
- Net Income: Net income attributable to common stockholders was $20.2 million and net income per share was $0.19, increases of 11.9% and 18.8%, respectively, compared to the third quarter of 2015.
- Same-Property RevPAR: Same-Property RevPAR decreased 0.7% compared to the third quarter of 2015 to $153.05, as occupancy declined 72 basis points while ADR increased 0.3%. Excluding the Company's Houston-area hotels, Same-Property RevPAR increased 2.3% compared to the third quarter of 2015, as occupancy increased 74 basis points and ADR increased 1.3%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 33.0%, an increase of 26 basis points compared to the third quarter of 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin increased 71 basis points compared to the third quarter of 2015.
- Total Portfolio RevPAR: Total Portfolio RevPAR was 6.3% higher than in the third quarter of 2015, reflecting portfolio performance, as well as changes in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA declined $1.8 million to $72.9 million, a decrease of 2.4% compared to the third quarter of 2015.
- Adjusted FFO per Diluted Share: Adjusted FFO available to common stockholders remained flat at $0.57 per diluted share compared to the third quarter of 2015.
- Financing Activity: During the third quarter, the Company paid off one $97 million mortgage loan and executed a swap to fix the interest rate on each of two variable rate mortgage loans.
- Dividends: The Company declared its third quarter dividend of $0.275 per share to common stock and unit holders of record on September 30, 2016.
"As anticipated, our third quarter operating results were a reflection of the challenging operating environment in the lodging industry in general and the Houston market in particular," said Marcel Verbaas, President and Chief Executive Officer of Xenia. "Despite these challenges, we were able to drive continued strong margin performance and improve our competitive positioning in our hotels' respective markets. These efforts resulted in a 33% Hotel EBITDA margin for our Same-Property portfolio. Excluding our assets in the Houston area, our Same-Property RevPAR increased 2.3%. While the current Houston lodging market is a difficult one, our expense focus continues to be successful and we look forward to the completion of our upcoming renovation of the Westin Galleria in the second quarter of 2017 as an additional driver for future growth for our extremely well-located hotels in the market."
Year to Date Results
- Net Income: For the nine months ended September 30, 2016, net income attributable to common stockholders was $37.1 million, a 37.6% increase compared to the same period prior year.
- Same-Property RevPAR: Same-Property RevPAR increased 0.6% compared to the nine months ended September 30, 2015, as occupancy declined 77 basis points while ADR increased 1.6%. Excluding the Company's Houston-area hotels, Same-Property RevPAR increased 3.0% compared to the nine months ended September 30, 2015, as occupancy increased 31 basis points and ADR increased 2.6%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 33.2%, an increase of 26 basis points compared to the same period in 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin grew 65 basis points during the nine months ended September 30, 2016 as compared to the same period in 2015.
- Total Portfolio RevPAR: Total Portfolio RevPAR was 5.8% higher than in the nine months ended September 30, 2015, reflecting portfolio performance, as well as changes in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA increased 1.6% during the nine months ended September 30, 2016 as compared to the same period in 2015.
- Adjusted FFO per Diluted Share: Adjusted FFO per diluted share was $1.65, a 3.8% increase compared to the same period in 2015.
"Notwithstanding the more difficult operating environment the industry is facing, we are pleased with the results of our expense controls and capital allocation efforts," Mr. Verbaas continued. "Year to date our Same-Property EBTIDA margin was up 26 basis points on 0.6% RevPAR growth. Also, primarily as a result of our financing activities and share repurchases, we have been able to grow our Adjusted FFO per diluted share by 3.8% year to date over last year's results. Additionally, our approximately 6% growth in Total Portfolio RevPAR through the first nine months of this year is indicative of the portfolio improvements we have been able to achieve since our listing in early 2015, including the sale of five hotels on the low end of our portfolio during the first half of the year."
Operating Results
The Company's results include the following:
Three Months Ended September 30,
Nine Months Ended September 30,
2016
2015
Change
2016
2015
Change
($ amounts in thousands, except hotel statistics and per share amounts)
Net income attributable to common stockholders
$
20,242
$
18,094
11.9
%
$
37,096
$
26,963
37.6
%
Net income per share available to common stockholders
$
0.19
$
0.16
18.8
%
$
0.34
0.24
41.7
%
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
78.6
%
79.3
%
(72 bps)
77.0
%
77.8
%
(77 bps)
Same-Property Average Daily Rate
$
194.73
$
194.25
0.3
%
$
197.39
$
194.22
1.6
%
Same-Property RevPAR
$
153.05
$
154.07
(0.7)
%
$
152.04
$
151.10
0.6
%
Same-Property Hotel EBITDA(1)
$
72,752
$
73,559
(1.1)
%
$
222,994
$
221,378
0.7
%
Same-Property Hotel EBITDA Margin(1)
33.0
%
32.8
%
26 bps
33.2
%
32.9
%
26 bps
Total Portfolio Number of Hotels(2)
46
50
(4)
46
50
(4)
Total Portfolio Number of Rooms(2)
11,594
13,104
(1,510)
11,594
13,104
(1,510)
Total Portfolio RevPAR(3)
$
156.63
$
147.31
6.3
%
$
152.49
$
144.11
5.8
%
Adjusted EBITDA(1)
$
72,897
$
74,701
(2.4)
%
$
223,427
$
219,820
1.6
%
Adjusted FFO(1)
$
61,758
$
63,356
(2.5)
%
$
179,079
$
178,120
0.5
%
Adjusted FFO per diluted share(1)
$
0.57
$
0.57
—
%
$
1.65
$
1.59
3.8
%
(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 September 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.
Financings and Balance Sheet
In August, the Company executed a swap to fix the interest rate on the loan collateralized by the Hotel Monaco Denver at 2.98% for the duration of the loan. Additionally in August, the Company executed a swap to fix the interest rate on the loan collateralized by the Andaz Napa at 2.99% for the duration of the loan.
In September 2016, the Company paid off the $97 million mortgage loan collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center with cash available on its balance sheet.
As of September 30, 2016, the Company had total outstanding debt of $1.2 billion with a weighted average interest rate of 3.39%. In addition, the Company had $185 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 3.5x.
Subsequent to quarter end, in October 2016, the Company paid off three mortgage loans, including the $13 million loan collateralized by the Courtyard Birmingham Downtown at UAB, the $83 million loan collateralized by the Renaissance Austin, and the $34 million loan collateralized by the Marriott Griffin Gate Resort & Spa. The Company has proactively addressed all of its 2016 and 2017 debt maturities.
Additionally in October, the Company modified the loans collateralized by the Marriott Dallas City Center and the Hyatt Regency Santa Clara. The amendments resulted in $11 million and $30 million of additional proceeds, respectively, and extended the maturity dates to January 2022.
"We are pleased with our financing activities to date, as we have addressed all of our maturities through early 2018 and lowered our weighted average interest rate by over 30 basis points since the first quarter. We continue to maintain a strong, conservative debt profile in terms of rate, maturity, liquidity and overall leverage level. We remain focused on balance sheet optimization and strive to maintain flexibility enabling us to continue to execute on our capital allocation strategy going forward," stated Atish Shah, Chief Financial Officer for Xenia.
Capital Expenditures
During the third quarter, the Company invested $16 million in its portfolio. The Company completed several smaller renovation projects during the quarter and continued its renovation of the meeting rooms and ballrooms at the Renaissance Atlanta Waverly Hotel & Convention Center. The large majority of the guestroom renovation at the Hyatt Key West Resort & Spa was completed during the quarter and the property was rebranded as the Hyatt Centric Key West Resort & Spa in early November after the completion of the renovation.
"We are excited to have completed the significant upgrade of the former Hyatt Key West Resort & Spa and the inclusion of the asset in Hyatt's new portfolio of lifestyle hotels, Hyatt Centric. In 2016, we completed a guestroom renovation, redesigned and renovated the Blue Mojito Pool Bar and Grill, and relocated and significantly enhanced the Jala Spa, allowing us to add two additional guestrooms to our highest RevPAR hotel. We believe these upgrades coupled with the Hyatt Centric brand philosophy will provide continued growth at one of our top lifestyle hotels and the island's premier boutique offering," commented Mr. Verbaas.
For the nine months ended September 30, 2016, the Company invested over $36 million in its portfolio. Several capital projects will commence during the fourth quarter, including guestroom renovations at the Andaz San Diego, Westin Galleria Houston, Bohemian Hotel Celebration, and Bohemian Hotel Savannah Riverfront.
Share Repurchase
In December 2015, the Company's Board of Directors authorized a $100 million share repurchase program. During the third quarter, the Company purchased 337,113 shares under its existing share repurchase authorization for an aggregate purchase price of $5.5 million. During the nine months ended September 30, 2016, the Company purchased 4,466,048 shares for an aggregate purchase price of $66.3 million.
Subsequent to quarter end and as of November 4, 2016, the Company repurchased an additional 402,715 shares for an aggregate purchase price of $6.2 million. A total of 4,868,763 shares have been repurchased, at a weighted average price of $14.88 per share, for total consideration of approximately $72.5 million as of November 4, 2016.
In November 2016, the Company's Board of Directors authorized the repurchase of up to an additional $75 million of the Company's outstanding common shares. Repurchases may be made in open market and privately-negotiated transactions, or by other means, including Rule 10b5-1 trading plans. The repurchase program may be suspended or discontinued at any time, and does not obligate the Company to acquire any particular amount of shares. Inclusive of this additional authorization, the Company had approximately $102.5 million remaining under its total repurchase authorization as of November 4, 2016.
2016 Outlook and Guidance
The Company's outlook for 2016 is based on the current economic environment, incorporates all expected renovation disruption, and assumes no further acquisitions, dispositions, or share repurchases. Same-Property RevPAR change excludes the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, as both properties commenced operations in the second half of 2015, and the Hotel Commonwealth, as the property underwent a significant expansion project in late 2015, as well as the five hotels sold in 2016. The change to the Company's anticipated Adjusted EBITDA from previously provided guidance is attributable to changes in the Company's forecast for the remainder of the year offset by a slight reduction in anticipated general & administrative expenses. The change in Adjusted FFO is due to similar factors, as well as a $1 million reduction in expected interest expense and a $0.5 million reduction in expected income tax expense.
Current 2016 Guidance
Variance to Prior Guidance
Low End
High End
Low End
High End
($ amounts in millions, except per share data)
Net Income
$45
$52
$(8)
$(9)
Same-Property RevPAR Change
(1.0)%
—%
(1.0)%
(1.0)%
Adjusted EBITDA
$282
$288
$(6)
$(8)
Adjusted FFO
$231
$237
$(5)
$(7)
Adjusted FFO per Diluted Share
$2.14
$2.19
$(0.03)
$(0.06)
Capital Expenditures
$58
$62
$1
$(2)
Guidance assumptions include:
- Average RevPAR declines of 16% to 18% at the Company's Houston-area hotels, primarily due to the impact of continued weakness in the energy market and new supply. Excluding the Company's Houston-area hotels, Same-Property RevPAR is expected to increase 1.0% to 2.0% as compared to 2015.
- General and administrative expense of approximately $21 million, excluding management transition and severance costs and non-cash share-based compensation.
- Interest expense of approximately $45 million, excluding non-cash loan related costs.
- Income tax expense of $5 million to $6 million.
To view full financial release and corresponding tables please click the PDF icon or visit: http://investors.xeniareit.com/CorporateProfile.aspx?iid=4552942
