ORLANDO, Fla., Feb. 23, 2016 — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the fourth quarter and year ended December 31, 2015. The Company's results include the following:
ORLANDO, Fla., Feb. 23, 2016 /PRNewswire/ — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the fourth quarter and year ended December 31, 2015. The Company's results include the following:
Three Months Ended December 31,
Year Ended December 31,
2015
2014
Change
2015
2014
Change
($ amounts in thousands, except hotel statistics and per share amounts)
Same-Property Number of Hotels
48
48
48
48
Same-Property Number of Rooms
12,398
12,394
12,398
12,394
Same-Property Occupancy
72.1
%
71.1
%
1.4
%
76.3
%
76.4
%
(0.1)
%
Same-Property Average Daily Rate(1)
$
191.39
$
184.19
3.9
%
$
190.03
$
181.14
4.9
%
Same-Property RevPAR(1)
$
137.96
$
130.97
5.3
%
$
144.92
$
138.46
4.7
%
Same-Property Hotel EBITDA(2)
$
75,939
$
67,661
12.2
%
$
310,336
$
287,720
7.9
%
Same-Property Hotel EBITDA Margin(2)
31.7
%
29.7
%
196 bps
32.3
%
31.3
%
107 bps
Adjusted EBITDA(2)
$
72,743
$
52,770
37.8
%
$
292,537
$
241,348
21.2
%
Adjusted FFO(2)
$
63,068
$
39,853
58.3
%
$
241,162
$
182,732
32.0
%
Adjusted FFO per diluted share(2)
$
0.56
$
0.35
60.0
%
$
2.15
$
1.61
33.5
%
Net income attributable to common stockholders(3)
$
61,781
$
75,101
(17.7)
%
$
88,746
$
109,799
(19.2)
%
Net income attributable to common stockholders per diluted share(3)
$
0.55
$
0.67
(17.9)
%
$
0.79
$
0.97
(18.6)
%
(1)
Average Daily Rate ("ADR") and Revenue Per Available Room ("RevPAR") for the year ended December 31, 2014 are presented after adjusting for the adoption of the Eleventh Revised Edition of the Uniform System of Accounts for the Lodging Industry ("USALI") as provided by our operators.
(2)
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") 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.
(3)
Includes $26.9 million of one-time separation and other start-up related expenses for the year ended December 31, 2015. See accompanying notes to the combined consolidated financial statements in the Company's Form 10-K to be filed with the SEC for more detail.
"Same-Property" results include the results for all hotels owned as of December 31, 2015, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, include periods prior to the Company's ownership of the Aston Waikiki Beach Hotel, Canary Hotel, RiverPlace Hotel and Hotel Palomar Philadelphia, and exclude the results of operations of the Crowne Plaza Charleston Airport – Convention Center, DoubleTree Suites Atlanta Galleria, and Holiday Inn Secaucus Meadowlands, all of which were sold in 2014, and the Hyatt Regency Orange County which was sold in October 2015. "Same-Property" results also exclude the NOI guaranty payment at the Andaz San Diego. Results include renovation and remediation disruption for multiple capital projects during the periods presented and for the impact of the Napa earthquake that occurred in August 2014.
The Company's combined consolidated financial statements prior to February 3, 2015 have been "carved out" of InvenTrust Properties Corp.'s ("InvenTrust") financial statements and reflect significant assumptions and allocations from those financial statements, such as allocations of corporate debt, shared services functions, employee-related costs and other corporate overhead. Based on these presentation matters, these combined consolidated financial statements may not be comparable to prior periods.
Fourth Quarter 2015 Highlights
- Same-Property RevPAR: Same-Property RevPAR, as adjusted by our operators for USALI, increased 5.3% from the fourth quarter of 2014 to $137.96, as occupancy increased 1.4% and ADR increased 3.9%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 31.7%, an increase of 196 basis points from the same period in 2014.
- Adjusted EBITDA: Adjusted EBITDA grew $20.0 million to $72.7 million, an increase of 37.8% over the fourth quarter of 2014.
- Adjusted FFO per Share: Adjusted FFO available to common stockholders increased to $0.56 per diluted share compared to $0.35 per diluted share for the fourth quarter of 2014, representing an increase of 60.0%.
- Financing Activity: The Company closed on two new senior unsecured term loans for a total of $300 million, completed two refinancings for $173 million, and paid off four loans for a total of $158 million.
- Disposition Activity: In October, the Company completed the sale of its 656-room Hyatt Regency Orange County in Garden Grove, California for $137 million. In connection with the sale, the Company paid off the $62 million loan collateralized by the hotel.
- Share Repurchase Program: In December, the Company announced the authorization of a share repurchase program for up to $100 million of its outstanding common shares.
- Dividends: The Company declared its fourth quarter dividend of $0.23 per share to stockholders of record on December 31, 2015. The dividend was paid on January 15, 2016.
Full Year 2015 Highlights
- Separation from InvenTrust: The Company successfully completed the spin-off from its former parent InvenTrust on February 3.
- Listing of Shares on the NYSE: The Company began trading on the New York Stock Exchange under the symbol "XHR" on February 4.
- Completion of Tender Offer: The Company completed its "Dutch Auction" self-tender offer on March 5 and accepted for purchase 1.8 million shares at $21.00 per share for a total purchase price of $36.9 million.
- Same-Property RevPAR: Same-Property RevPAR increased 4.7% to $144.92, driven by ADR growth of 4.9% and offset by a decrease in occupancy of 0.1%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 32.3%, which improved 107 basis points compared to 2014.
- Adjusted EBITDA: The Company's Adjusted EBITDA was $292.5 million, an increase of 21.2% over 2014.
- Adjusted FFO per Share: The Company generated Adjusted FFO per diluted share of $2.15 during the year ended 2015, a 33.5% increase.
- Investment Activity: The Company made several changes to its operating portfolio in 2015, including the following:
- In July, the Company acquired a three property portfolio consisting of the Canary Hotel in Santa Barbara, California, the RiverPlace Hotel in Portland, Oregon, and the Hotel Palomar in Philadelphia, Pennsylvania, for a purchase price of $245 million.
- In August, the Company announced it had entered into a purchase and sale agreement to acquire the Hotel Commonwealth in Boston, Massachusetts for $136 million upon completion of the hotel's 96-room expansion project. This transaction closed in January 2016.
- Also in August, the Company commenced operations at the Grand Bohemian Hotel Charleston, a 50-room boutique lifestyle hotel located in the historic district of Charleston, South Carolina. The Company has a 75% interest in the joint venture that owns the property.
- In October, the Company commenced operations at the Grand Bohemian Hotel Mountain Brook, a 100-room boutique lifestyle hotel located in an affluent suburb of Birmingham, Alabama. The Company has a 75% interest in the joint venture that owns the property.
- Also in October, the Company completed the sale of the Hyatt Regency Orange County in Garden Grove, California, for a price of $137 million.
- Capital Markets: The Company completed several capital markets initiatives during 2015, including the following:
- In the first quarter, the Company closed its $400 million senior unsecured revolving credit facility and repaid the $26 million mortgage loan on the Andaz San Diego.
- In the second quarter, the Company repaid the $55 million mortgage loan on the Hilton Garden Inn Washington, D.C.
- In the fourth quarter, the Company closed on two new senior unsecured term loans for a total of $300 million, completed two refinancings for $173 million, and paid off four loans for a total of $158 million, in addition to the $62 million loan paid off in connection with the sale of the Hyatt Regency Orange County.
- Also in the fourth quarter, the Company announced that its Board of Directors authorized a share repurchase program for up to $100 million of the Company's outstanding common shares. Under the program, the Company is authorized to repurchase shares from time to time in transactions on the open market, in privately-negotiated transactions or by other means, including Rule 10b5-1 trading plans, in accordance with applicable securities laws and other restrictions.
- Capital Investments: The Company completed $46.1 million of capital projects at its hotels throughout the year. This amount excludes earthquake remediation at its two Napa hotels.
- The Marriott San Francisco Airport Waterfront renovation consisted of a full guest room and bathroom renovation, including 518 tub-to-shower conversions, and the addition of three guest rooms.
- The Hyatt Regency Santa Clara also completed a guest room renovation during the year, which included the addition of one guest room.
- The Aston Waikiki Beach Hotel received an extensive pool deck renovation.
- In addition, the Company completed a number of additional renovation projects including public space upgrades at the Loews New Orleans Hotel, Renaissance Austin Hotel, Fairmont Dallas, and Marriott Griffin Gate Resort & Spa, and food and beverage enhancements at the Renaissance Austin Hotel and the Hotel Monaco Denver.
"We are pleased with our portfolio performance in the fourth quarter as our 48 same-property hotel portfolio experienced an increase of 5.3% in RevPAR, a 12.2% increase in Hotel EBITDA and significant Hotel EBITDA margin improvement of 196 basis points," said Marcel Verbaas, President and Chief Executive Officer of Xenia. "Our fourth quarter performance was aided by an easier comparison due to the significant impact of the Napa earthquake at our Andaz during the fourth quarter of 2014. When excluding the hotel, our portfolio RevPAR increased 3.5%."
"Our full-year 2015 RevPAR increase of 4.7% coupled with a 107 basis point increase in Hotel EBITDA margin demonstrates the strength of our overall portfolio performance," noted Mr. Verbaas. "This is particularly evident when considering the significant impact of our renovations at the Marriott San Francisco Airport Waterfront and the Hyatt Regency Santa Clara during the early part of the year, as well as the impact of energy market challenges on Houston. When excluding our Houston assets, our same-property portfolio RevPAR increased 6.1% in 2015. As a result of our fourth quarter performance, our full-year 2015 Adjusted EBITDA was $292.5 million and our 2015 Adjusted FFO was $241.2 million which were near and above the high end, respectively, of our most recent guidance."
Disposition Activity
In the fourth quarter, the Company sold the 656-room Hyatt Regency Orange County in Garden Grove, California for a sale price of $137 million. The sale price represented an 11.8x multiple on the hotel's 2015 forecast EBITDA. In addition, the Company retained the approximately $5.9 million balance in the hotel's capital expenditure reserve account. Excess proceeds from the disposition after repayment of the $62 million mortgage loan collateralized by the hotel were utilized to pay off the $73 million mortgage loan collateralized by the Company's Marriott Woodlands Waterway Hotel & Convention Center.
Financing Activity
In October, the Company closed on two new senior unsecured term loans, a $175 million unsecured term loan maturing in February 2021 and a $125 million unsecured term loan maturing in October 2022. The $175 million term loan bears an interest rate based on a pricing grid with a range of 145 to 225 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 150 basis points. In conjunction with the term loan, the Company executed interest rate swaps to fix LIBOR over the period of the loan at 1.29%. As a result the current annual interest rate on the term loan is 2.79%. Proceeds from this term loan were used to pay off the $53 million mortgage collateralized by the Marriott San Francisco Airport Waterfront and to pay down the outstanding balance on the Company's unsecured line of credit.
The $125 million term loan 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 180 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 3.63%. Funding of the term loan was completed in January 2016 in connection with the closing of the Hotel Commonwealth acquisition.
Additionally in October, the Company completed a refinancing of the $30 million, 5.50% fixed rate mortgage on the Residence Inn Cambridge with the existing lender. The new $63 million mortgage has a ten-year term at a fixed annual interest rate of 4.48%. Excess proceeds from this loan were used to pay off the $19 million mortgage collateralized by the Hilton Garden Inn Evanston and the $13 million mortgage collateralized by the Hampton Inn & Suites Denver Downtown.
In December, the Company amended the $110 million loan collateralized by the Westin Galleria Houston & Westin Oaks Houston at The Galleria with the existing lender. The modification lowered the interest rate by 65 basis points, to LIBOR plus 250 basis points.
Capital Investments
During the fourth quarter, the Company commenced a renovation at the 275-room Marriott Napa Valley Hotel & Spa, consisting of a guest room and bathroom renovation, including 82 tub-to-shower conversions, and a pool and outdoor space transformation, which will be completed in early 2016. The Company anticipates spending approximately $12.0 million on guest rooms, bathrooms, corridors, meeting space and the new outdoor experience.
Balance Sheet
As of December 31, 2015, the Company had total outstanding debt of $1.1 billion with a weighted average interest rate of 3.51%. Total net debt to trailing 12 month pro forma Corporate EBITDA (as defined in the Company's senior unsecured credit facility) was 3.5x as of December 31, 2015. The Company had $122 million of cash and cash equivalents and full availability on its $400 million senior unsecured credit facility.
"Overall, 2015 was a very successful first year for Xenia as a stand-alone publicly listed company. We completed our separation from InvenTrust and were able to quickly terminate the various support services under our Transition Services Agreement. We also continued our process of portfolio improvement through the completion of significant capital projects at two of our largest hotels, the acquisition of three high-quality lifestyle hotels in desirable locations, the announced acquisition of the Hotel Commonwealth which closed subsequent to year-end, the completion of our two development projects, and the sale of the Hyatt Regency Orange County at an attractive valuation," continued Mr. Verbaas. "Meanwhile, we strengthened the balance sheet by closing on a $400 million unsecured line of credit, $300 million in unsecured term loans and $170 million in mortgage refinancings, and paying off an additional $158 million in mortgage loans. As a result, we were able to extend our maturity profile, unencumber six additional assets and lower our weighted average interest rate by nearly 50 basis points. We believe that our high-quality portfolio is well-positioned for continued growth as a result of these efforts and our commitment to our strategy of investing in a diversified portfolio primarily focused on top 25 markets and key leisure destinations."
Subsequent Events
Portfolio Updates
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, funded with proceeds from the Company's $125 million, seven-year term loan and cash on hand.
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.
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 approximately $2 million balance in the hotel's capital expenditure reserve account. Upon completion of the disposition, the Company paid off the $27.8 million mortgage loan collateralized by the hotel.
Capital Markets
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 4.14%.
Also in January 2016, the Company began repurchasing shares under its $100 million share repurchase authorization. As of February 16, 2016, the Company has purchased a total of 2,365,292 shares at a weighted average purchase price of $14.11 for total consideration of $33.4 million.
"The completion of the Hotel Commonwealth acquisition after its well-executed expansion project has added a magnificent hotel in an excellent location to our portfolio. With Sage Hospitality now operating seven of our hotels, we look forward to a continued strong relationship with one of the premier operators in the lodging space," said Mr. Verbaas. "We are also pleased to have completed the sale of one of the assets on the lower end of our portfolio, the Hilton University of Florida Conference Center Gainesville, continuing to execute on our plan of selling assets that are in locations not consistent with our long-term strategy and that require significant near-term capital expenditures. In addition to selling the hotel for a price that represented a 9.0x multiple on 2015 EBITDA, we also retained the $2 million balance in the hotel's capital expenditure reserve. The buyer plans to spend approximately $13.5 million on capital expenditures required by the PIP or otherwise, resulting in a total investment amounting to 12.3x 2015 EBITDA."
"As previously disclosed, our Board of Directors approved a $100 million share repurchase program in December," Mr. Verbaas continued. "We believe this to be an attractive use of our capital and are pleased with our activity to date."
To view full financial release and corresponding tables please click the PDF icon or visit:
http://investors.xeniareit.com/CorporateProfile.aspx?iid=4552942
