ORLANDO, Fla., Feb. 28, 2017 — Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the fourth quarter and full year ended December 31, 2016.
Fourth Quarter 2016 Highlights
- Net Income: Net income attributable to common stockholders was $48.8 million and net income per diluted share was $0.44, decreases of 21.1% and 20.0%, respectively, compared to the fourth quarter of 2015, partially due to a difference in the gain on sale of investment properties of $13.6 million.
- Same-Property RevPAR: Same-Property RevPAR decreased 4.2% compared to the fourth quarter of 2015 to $138.37, as occupancy declined 194 basis points and ADR decreased 1.5%. Excluding the Company's Houston-area hotels, Same-Property RevPAR decreased 1.9%, as occupancy declined 105 basis points and ADR decreased 0.5%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 30.9%, a decrease of 116 basis points compared to the fourth quarter of 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin decreased 71 basis points.
- Total Portfolio RevPAR: Total Portfolio RevPAR was 0.9% higher than in the fourth quarter of 2015, reflecting improvements in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA declined $9.1 million to $64.1 million, a decrease of 12.4% partially due to net asset dispositions since the fourth quarter of 2015.
- Adjusted FFO per Diluted Share: Adjusted FFO per diluted share decreased 1.8% to $0.55 per diluted share compared to the fourth quarter of 2015.
- Financing Activity: The Company paid off three mortgage loans totaling $130 million and modified two loans resulting in $41 million of incremental proceeds.
- Disposition Activity: The Company sold four hotels for total consideration of approximately $119 million.
- Dividends: The Company declared its fourth quarter dividend of $0.275 per share to common stockholders of record on December 30, 2016.
Full Year 2016 Highlights
- Net Income: Net income attributable to common stockholders was $85.9 million, a 3.3% decrease compared to the prior year.
- Same-Property RevPAR: Same-Property RevPAR decreased 0.3% to $150.12, as occupancy declined 103 basis points while ADR increased 1.1%. Excluding the Company's Houston-area hotels, Same-Property RevPAR increased 1.9%, as occupancy remained flat and ADR increased 2.0%.
- Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 32.6%, an increase of 6 basis points compared to the full year 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin grew 40 basis points during the year ended December 31, 2016.
- Total Portfolio RevPAR: Total Portfolio RevPAR increased 4.7%, reflecting improvements in portfolio composition.
- Adjusted EBITDA: Adjusted EBITDA was $287.3 million, a decrease of 1.9% over 2015.
- Adjusted FFO per Diluted Share: The Company generated Adjusted FFO per diluted share of $2.20, a 2.3% increase over 2015.
- Investment Activity: The Company made several improvements in portfolio composition. In January, the Company completed the acquisition of the 245-room Hotel Commonwealth in Boston, Massachusetts for a purchase price of $136 million. The Company sold nine hotels comprising 1,887 rooms for total consideration of $290 million.
- Financing Activity: The Company paid off $277 million of mortgage loans, refinanced or modified three loans resulting in $52 million of incremental proceeds, and fixed LIBOR on $139 million of variable rate debt. In addition, the $125 million term loan that was entered into in late 2015 was funded and the Company obtained a new $60 million mortgage loan collateralized by the Hotel Palomar Philadelphia.
- Share Repurchase Activity: The Company repurchased approximately 5.0 million shares of its common stock at a weighted average purchase price of $14.89 per share, or $74 million in total.
- Dividends: The Company declared $1.10 of dividends per share to common stockholders during 2016, which represented a 7.2% yield relative to the Company's stock price on December 31, 2015.
"Our portfolio performed in-line with our expectations during the fourth quarter, as Same-Property RevPAR came in toward the higher end of our implied guidance range and Adjusted FFO exceeded the top end of the range," commented Marcel Verbaas, President and Chief Executive Officer of Xenia. "Our quarterly results were negatively impacted by the continued weakness in the Houston market, disruption due to renovations, and weak food and beverage revenues at several of our larger, group-oriented hotels. Several non-recurring events in the fourth quarter of 2015 also impacted the year-over-year comparison. Despite a slight decline in Same-Property RevPAR for 2016, our dedicated asset management team remained focused on cost containment allowing us to maintain margins for the year. Throughout the past year we have continued to solidify the foundation of our company as exemplified by the enhancements to portfolio quality and the fortitude of our balance sheet. We have ample liquidity with over $215 million of cash on our balance sheet, full availability on our line of credit, and more than 55% of our hotels unencumbered by debt, all of which provide us flexibility to take advantage of opportunities as they arise."
Operating Results
The Company's results include the following:
Three Months Ended
December 31,
Year Ended December 31,
2016
2015
Change
2016
2015
Change
($ amounts in thousands, except hotel statistics and per share amounts)
Net income attributable to common stockholders
$
48,760
$
61,781
(21.1)
%
$
85,855
$
88,746
(3.3)
%
Net income per share available to common stockholders
$
0.44
$
0.55
(20.0)
%
$
0.79
0.79
—
%
Same-Property Number of Hotels
39
39
—
39
39
—
Same-Property Number of Rooms
10,516
10,511
5
10,516
10,511
5
Same-Property Occupancy
70.8
%
72.8
%
(194 bps)
75.4
%
76.5
%
(103 bps)
Same-Property Average Daily Rate
$
195.39
$
198.44
(1.5)
%
$
199.01
$
196.87
1.1
%
Same-Property RevPAR
$
138.37
$
144.39
(4.2)
%
$
150.12
$
150.52
(0.3)
%
Same-Property Hotel EBITDA(1)
$
62,334
$
69,558
(10.4)
%
$
276,581
$
280,586
(1.4)
%
Same-Property Hotel EBITDA Margin(1)
30.9
%
32.1
%
(116 bps)
32.6
%
32.5
%
6 bps
Total Portfolio Number of Hotels(2)
42
50
(8)
42
50
(8)
Total Portfolio Number of Rooms(2)
10,911
12,548
(1,637)
10,911
12,548
(1,637)
Total Portfolio RevPAR(3)
$
139.30
$
138.07
0.9
%
$
149.32
$
142.59
4.7
%
Adjusted EBITDA(1)
$
64,126
$
73,187
(12.4)
%
$
287,328
$
293,010
(1.9)
%
Adjusted FFO(1)
$
59,396
$
63,508
(6.5)
%
$
238,252
$
241,632
(1.4)
%
Adjusted FFO per diluted share(1)
$
0.55
$
0.56
(1.8)
%
$
2.20
$
2.15
2.3
%
"Same-Property" includes all hotels owned as of December 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 the Hotel Commonwealth, which underwent a significant expansion project in late 2015. "Same-Property" includes periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia, and excludes the NOI guaranty payment at the Andaz San Diego. "Same-Property" also includes renovation disruption for multiple capital projects during the periods presented.
(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.
Disposition Activity
As previously disclosed, in December the Company sold the 162-room Homewood Suites by Hilton Houston near the Galleria, the 148-room Hampton Inn & Suites Denver Downtown, the 178-room Hilton Garden Inn Chicago North Shore/Evanston and the 195-room Hilton St. Louis Downtown for an aggregate sale price of approximately $119 million.
During 2016, the Company sold nine hotels for approximately $290 million. The dispositions allowed the Company to exit several non-core, low-growth markets including Gainesville, Florida and St. Louis, Missouri, as well as reduce exposure in Houston, Denver, and Chicago. On average, the disposition hotels generated EBITDA per key 40% below the remaining portfolio. The disposition hotels had an average RevPAR of approximately $110 for the trailing twelve months prior to sale, which is significantly below the $152.46 RevPAR for full year 2016 for hotels in the portfolio at year-end.
Financings and Balance Sheet
In the fourth quarter, the Company paid off three mortgage loans totaling $130 million, including the $13 million loan collateralized by the Courtyard Birmingham Downtown at UAB, the $83 million loan collateralized by the Renaissance Austin Hotel, and the $34 million loan collateralized by the Marriott Griffin Gate Resort & Spa. Additionally in the fourth quarter, 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 incremental proceeds, respectively, and extended the maturity dates to January 2022.
During 2016, the Company originated a new $60 million loan collateralized by Hotel Palomar Philadelphia, paid off six mortgage loans totaling $277 million, drew down its $125 million seven-year term loan in connection with the Hotel Commonwealth acquisition, refinanced or modified three loans resulting in $52 million in incremental proceeds, and fixed LIBOR on $139 million of variable rate debt.
Subsequent to year-end, the Company executed swaps to fix the interest rates on the loans collateralized by the Marriott Dallas City Center and the Hyatt Regency Santa Clara at 4.05% and 3.81%, respectively, effective on March 1, 2017 through the maturity date of the loans in January 2022. As a result, the Company's ratio of variable rate to total debt is expected to be reduced from 52% at year-end 2015 to 34% on March 1, 2017.
As of December 31, 2016, the Company had total outstanding debt of $1.1 billion with a weighted average interest rate of 3.24%. In addition, the Company had $216 million of cash and cash equivalents and full availability on its $400 million senior unsecured credit facility. Total net debt to trailing twelve month Corporate EBITDA (as defined in Section 1.01 of the Company's senior unsecured credit facility) was 3.3x.
"We are pleased with our financing activities in 2016. We strengthened our balance sheet by addressing all debt maturities through early 2018, reducing exposure to interest rate risk, lowering our weighted average interest rate, and extending the average duration of our debt. Our debt profile continues to be strong, highlighted by a conservative leverage ratio and low cost of debt. As we look forward, we expect our balance sheet strength to enable us to create long-term value," commented Atish Shah, Chief Financial Officer for Xenia.
Capital Expenditures
During the fourth quarter, the Company invested $21 million in its portfolio. For the full year 2016, the Company invested $57 million in its portfolio, including the following projects:
- The extensive renovation of the Marriott Napa Valley Hotel & Spa, which transformed the guestrooms, meeting and pre-function space, and pool and outdoor function space.
- The renovation of its Hyatt in Key West, including upgrades to the property's guestrooms, Blue Mojito Pool Bar & Grill, and Jala Spa. These renovations resulted in the addition of two guestrooms at the hotel and upon completion of the renovation the hotel was rebranded as the Hyatt Centric Key West Resort & Spa.
- The completion of the meeting room and ballroom renovation at the Renaissance Atlanta Waverly Hotel.
- The renovation of the concierge-level guestrooms at the Fairmont Dallas.
- The commencement of the guestroom renovation at the Westin Galleria Houston, which will continue through the first half of 2017.
- The commencement of the guestroom renovation at the Andaz San Diego, which is expected to be complete in the second quarter of 2017.
- The commencement of guestroom renovations at the Bohemian Hotel Celebration and Bohemian Hotel Savannah Riverfront, and a meeting room renovation at the Marriott San Francisco Airport Waterfront.
To view full financial release and corresponding tables please click the PDF icon or visit: http://investors.xeniareit.com/CorporateProfile.aspx?iid=4552942
