Xenia Hotels & Resorts Reports Third Quarter 2015 Results

Nov 12, 2015, 06:00 ET from Xenia Hotels & Resorts, Inc.

ORLANDO, Fla., Nov. 12, 2015 /PRNewswire/ -- Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the third quarter ended September 30, 2015.  The Company's results include the following:

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

Change

2015

2014

Change

($ amounts in thousands, except hotel statistics and per share amounts)

Same-Property Number of Hotels

49

49

49

49

Same-Property Number of Rooms

13,054

13,047

13,054

13,047

Same-Property Occupancy

79.1

%

79.0

%

0.1

%

77.7

%

78.3

%

(0.7)

%

Same-Property Average Daily Rate(1)

$

186.85

$

178.71

4.6

%

$

187.67

$

178.28

5.3

%

Same-Property RevPAR(1)

$

147.81

$

141.26

4.6

%

$

145.91

$

139.61

4.5

%

Same-Property Hotel EBITDA(2)

$

79,737

$

75,331

5.8

%

$

242,867

$

227,300

6.8

%

Same-Property Hotel EBITDA Margin(2)

31.8

%

31.2

%

60 bps

32.2

%

31.3

%

90 bps

Adjusted EBITDA(2)

$

74,870

$

59,655

25.5

%

$

219,773

$

188,302

16.7

%

Adjusted FFO(2)

$

63,513

$

44,411

43.0

%

$

178,061

$

142,603

24.9

%

Adjusted FFO per diluted share(2)

$

0.57

$

0.39

46.2

%

$

1.59

$

1.26

26.2

%

Net income to common stockholders(3)

$

18,094

$

9,495

90.6

%

$

26,963

$

34,700

(22.3)

%

Net income to common stockholders per diluted share(3)

$

0.16

$

0.08

100.0

%

$

0.24

$

0.31

(22.6)

%

(1)

Average Daily Rate ("ADR") and Revenue Per Available Room ("RevPAR") for the three and nine months ended September 30, 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"), Adjusted FFO, and Adjusted FFO per share.  EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, per share and hotel EBITDA are non-GAAP financial measures.

(3)

Includes $0.4 million and $26.9 million of one-time general and administrative expenses for three and nine months ended September 30, 2015, respectively.  See accompanying notes to the combined consolidated financial statements in the Company's Form 10-Q for more detail.

"Same-Property" results include the results for all hotels owned as of September 30, 2015, except for the Grand Bohemian Hotel Charleston and one hotel under development, include periods prior to the Company's ownership of the Aston Waikiki Beach Resort, RiverPlace Hotel, Canary 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. "Same-Property" results also exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation and remediation disruption.

The Company's 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 financial statements may not be comparable to prior periods.

Third Quarter 2015 Highlights

  • Same-Property RevPAR: Same-Property RevPAR, as adjusted by our operators for USALI, increased 4.6% from the third quarter of 2014 to $147.81, as occupancy remained essentially flat and ADR increased 4.6%.
  • Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 31.8%, an increase of 60 basis points from the same period in 2014.
  • Adjusted EBITDA: Adjusted EBITDA grew $15.2 million to $74.9 million, an increase of 25.5% over the third quarter of 2014.
  • Adjusted FFO: Adjusted FFO available to common stockholders increased to $0.57 per diluted share compared to $0.39 per diluted share for the third quarter of 2014, representing an increase of 46.2%.
  • Acquisition Activity: In July, the Company acquired a three property portfolio consisting of the RiverPlace Hotel in Portland, Oregon, the Canary Hotel in Santa Barbara, California, 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 current expansion project. This transaction is expected to be completed in early 2016.
  • Development Completion: The Company completed the development of the Grand Bohemian Hotel Charleston in Charleston, South Carolina in August.
  • Dividends: The Company declared its third quarter dividend of $0.23 per share on September 17, 2015. The dividend was paid on October 15, 2015.

"Our third quarter results were strong, both from a revenue and bottom-line perspective," said Marcel Verbaas, President and Chief Executive Officer of Xenia Hotels & Resorts. "The strength of our diversified portfolio was evidenced by our RevPAR increase of 4.6%, despite the challenges the industry faced in August and September as a result of the shift in timing of certain holidays and the weakness in the Houston market that continues to impact our hotels there. With most of the RevPAR growth in our hotels resulting from ADR increases, we were able to offset fairly significant increases in real estate taxes at a number of our hotels and improve our hotel operating margin by 60 basis points this quarter."

Mr. Verbaas continued, "We maintain a positive outlook for the industry in general and our portfolio in particular. When excluding our Houston hotels we grew portfolio RevPAR by 5.9%. Given the particular third quarter challenges, we believe this result is a testament to both our commitment to our stated strategy, as well as the success of our asset management practices. We are also excited about the continued evolution of our portfolio. The addition of the three hotels we acquired in July and the completion of the Grand Bohemian Hotel Charleston are a further reflection of the execution of our strategic plan as we added four high quality lifestyle assets in excellent on-strategy locations."

Year to Date Results

For the nine months ended September 30, 2015, Same-Property RevPAR increased to $145.91, reflecting a 4.5% growth from the same period in 2014, driven by ADR growth of 5.3% and offset by a decrease in occupancy of 0.7%.  The Company's Same-Property Hotel EBITDA Margin was 32.2%, which improved 90 basis points compared to the same period in prior year. The Company's Adjusted EBITDA and Adjusted FFO per diluted share increased 16.7% and 26.2%, respectively, during the first nine months of 2015 as compared to the same period in 2014.

Acquisitions and Developments

In the third quarter, the Company added four hotels to its operating portfolio and announced one additional hotel acquisition that is expected to close in early 2016.

In July 2015 the Company completed the acquisition of three high-quality lifestyle boutique hotels for a combined purchase price of $245 million.  The 84-room RiverPlace Hotel located in downtown Portland, the 97-room Canary Hotel located in downtown Santa Barbara, and the 230-room Hotel Palomar located in downtown Philadelphia, are all managed by Kimpton Hotels & Restaurants.  The three hotels are well-located in high barrier to entry markets with diverse demand generators.

Additionally, the Grand Bohemian Hotel Charleston, a 50-room Autograph Collection hotel located in Charleston, South Carolina in which the Company owns a 75% interest, opened in late August 2015.  The hotel is located in the heart of the historic district in Charleston, surrounded by local landmarks, shopping and dining. The total cost to develop the hotel was approximately $32 million.

Finally, in August 2015 the Company announced it had entered into a purchase agreement to acquire the Hotel Commonwealth in Boston for a purchase price of $136 million.  The hotel has an irreplaceable location between Fenway Park and Boston University in the Kenmore Square section of Boston.  The transaction, which is subject to customary closing conditions and the completion of the current hotel expansion, is expected to close in early 2016.  The hotel will continue to be managed by Sage Hospitality.

Capital Investments

The Company invested $9.7 million in capital expenditures during the third quarter after having completed several major renovation projects during the first half of the year. For the nine months ended September 30, 2015, the Company has invested $38.2 million in capital expenditures including a guest room renovation and bathroom conversion at the Marriott San Francisco Airport Waterfront, a guest room renovation at the Hyatt Regency Santa Clara and a pool deck renovation at the Aston Waikiki Beach Resort.  The Company anticipates total capital expenditures for 2015 of $45 to $50 million, excluding earthquake remediation repairs at the Andaz Napa.

Balance Sheet

As of September 30, 2015, the Company had total outstanding debt of $1.2 billion, including $117 million outstanding on its $400 million senior unsecured credit facility, and a weighted average interest rate of 3.73%.  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 September 30, 2015.  As of the end of the third quarter, the Company had $99 million of cash and cash equivalents.

Subsequent Events

Portfolio Updates

In October 2015, the Company announced the sale of the 656-room Hyatt Regency Orange County in Garden Grove, California, for a price of $137 million.  The sale price represented an 11.8x multiple on the hotel's 2015 forecasted EBITDA and a 7.1% capitalization rate on 2015 forecasted NOI. In addition to the purchase price, the Company retained the approximate $5.9 million balance in the hotel's capital expenditure reserve account.

The Grand Bohemian Hotel Mountain Brook, a 100-room Autograph Collection hotel located in an upscale suburb of Birmingham, Alabama, in which the Company owns a 75% interest, opened in late October 2015.  The total cost to develop the hotel is expected to be approximately $45 million.

Also in October 2015, the Company transitioned the management of the Courtyard Pittsburgh Downtown, Hilton Garden Inn Evanston, Courtyard Kansas City Country Club Plaza and Homewood Suites Houston Galleria to Sage Hospitality, which now manages six hotels for the Company.

"The portfolio initiatives we were able to complete in the early part of the fourth quarter were particularly meaningful." said Mr. Verbaas. "We are excited about the completion of the Grand Bohemian Hotel Mountain Brook, our fifth hotel in Marriott's Autograph Collection, and also our fifth hotel managed by The Kessler Collection. Furthermore, as a result of the management transition at four of our urban upscale hotels that we initiated, Sage will be operating seven of our hotels upon completion of the Hotel Commonwealth transaction. We are looking forward to reaping the benefits from the continued strengthening of our relationship with Sage."

Mr. Verbaas added, "The sale of our Hyatt Regency in Garden Grove was the result of a well-executed strategic decision. Based on the characteristics of the hotel and the market, we felt the time was right to explore a sale for this legacy hotel. Given the experience of our management team with these type of transactions, both as a seller and a buyer over many years, we were able to complete this disposition smoothly and expeditiously at an attractive sale price. The sale of this asset allowed us to reduce debt and create further balance sheet flexibility to continue to execute on our strategy of owning a portfolio of high-quality hotels primarily in top 25 markets and key leisure destinations."

Capital Markets

On October 22, 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 leverage ratio. Based on the Company's pro forma leverage ratio, the current effective interest rate is LIBOR plus 160 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 2.89%.

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 leverage ratio. Based on the Company's pro forma leverage ratio, the current effective interest rate is LIBOR plus 190 basis points. Funding of the term loan is expected to occur in early 2016 in connection with the anticipated closing of the Company's previously announced Hotel Commonwealth acquisition.

Additionally the Company completed a refinancing of the $30 million, 5.50% fixed rate mortgage on the Residence Inn Cambridge subsequent to quarter end with the existing lender.  The new $63 million mortgage has a ten year term at a fixed annual interest rate of 4.48%.

With the proceeds from the $175 million term loan, excess proceeds from the refinancing of the Residence Inn Cambridge and net sale proceeds from the Hyatt Regency Orange County, the Company was able to pay down the outstanding balance on its revolving line of credit, as well as unencumber four hotels including the Marriott San Francisco Airport Waterfront, the Marriott Woodlands Waterway Hotel & Convention Center, the Hilton Garden Inn Evanston, and the Hampton Inn & Suites Denver Downtown.

Pro forma for the refinancings subsequent to quarter end, the Company has total debt outstanding of $1.1 billion with no outstanding balance on its revolving line of credit and a weighted average interest rate of 3.57%.

"We are pleased with the progress we have made to proactively address our 2016 and 2017 maturities and extend our maturity profile, while maintaining full capacity on our $400 million unsecured credit facility," commented Andy Welch, Executive Vice President and Chief Financial Officer of Xenia Hotels & Resorts.  "The completion of these financings allows us to further stagger and increase the weighted average tenor of our debt maturities, unencumber four additional hotels, and lower our weighted average interest rate."

2015 Outlook and Guidance

On October 5, 2015, the Company provided an update to its 2015 outlook based on preliminary third quarter results, revising its projected same-property RevPAR growth to 4.5% to 5.25% and forecasting that 2015 Adjusted EBITDA would fall between the low and mid-point of its previously announced range of $288 to $297 million. The Company is now updating its outlook for 2015 to incorporate the recent disposition of the Hyatt Regency Orange County, actual third quarter results and updated projections for the fourth quarter of 2015.  The Company's outlook for 2015 is based on the current economic environment, incorporates all expected renovation disruption and assumes no further acquisitions or dispositions. The Company's 2015 capital expenditure range includes its renovation projects, but excludes earthquake damage remediation at the two Napa hotels. The Company's updated financial expectations for 2015 are as follows:

Revised Guidance

Low End

High End

($ in millions)

Same-Property RevPAR growth(1)

4.50%

5.25%

Adjusted EBITDA

$288.0

$293.0

Adjusted FFO

$236.0

$241.0

Capital Expenditures

$45.0

$50.0

(1)

Adjusted for changes resulting from the adoption of USALI

"Based on our third quarter results as well as the visibility we now have into our anticipated fourth quarter results, including portfolio RevPAR growth of 6.7% in October, we are maintaining our previous RevPAR range guidance of 4.5% to 5.25%," said Mr. Verbaas. "Despite the loss of the $1.9 million projected EBITDA contribution from the Hyatt Regency Orange County from the sale date to the end of the year, we now expect to offset this loss mainly as a result of continued margin improvement and G&A savings, enabling us to maintain Adjusted EBITDA guidance consistent with the range we indicated in early October. Additionally, we are increasing our guidance range for Adjusted FFO, primarily as a result of lower income taxes and interest expense than we had previously projected."

Third Quarter 2015 Earnings Call

The Company will conduct its quarterly conference call on Thursday, November 12, 2015 at 11:00 AM eastern time. To participate in the conference call, please dial (855) 656-0921. Additionally, a live webcast of the conference call will be available through the Company's website, www.xeniareit.com. A replay of the conference call will be archived and available online through the Investor Relations section of the Company's website for 90 days.

About Xenia Hotels & Resorts, Inc.

Xenia Hotels & Resorts, Inc. is a self-advised and self-administered REIT that invests primarily in premium full service, lifestyle and urban upscale hotels, with a focus on the top 25 U.S. lodging markets as well as key leisure destinations in the United States. The Company owns 50 hotels, including 48 wholly owned hotels, comprising 12,548 rooms, across 21 states and the District of Columbia. Xenia's hotels are primarily operated by industry leaders such as Marriott®, Hilton®, Hyatt®, Starwood®, Kimpton®, Aston®, Fairmont® and Loews®, as well as leading independent management companies including Sage Hospitality, Urgo Hotels & Resorts, Davidson Hotels & Resorts, The Kessler Collection and Concord Hospitality. For more information on Xenia's business, refer to the Company website at www.xeniareit.com.

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company's future plans, strategies and expectations. Forward-looking statements are generally identifiable by use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "illustrative," references to "outlook," and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements in this press release include, among others, statements about our plans, strategies, the outlook for RevPAR, Adjusted EBITDA, Adjusted FFO, capital expenditures and derivations thereof, financial performance, prospects or future events. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company's dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks, downturns in general and local economic conditions and cancellation of or delays in the completion of anticipated demand generators, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, (viii) risks associated with redevelopment and repositioning projects, including delays and cost overruns and (ix) the risk factors discussed in the Company's Annual Report on Form 10-K as updated in its Quarterly Reports. Accordingly, there is no assurance that the Company's expectations will be realized. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release. We do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company's website at www.xeniareit.com.

All information in this press release is as of the date of its release. The Company undertakes no duty to update the statements in this press release to conform the statements to actual results or changes in the Company's expectations.

For additional information or to receive press releases via email, please visit our website at www.xeniareit.com.

Xenia Hotels & Resorts, Inc.

Combined Condensed Consolidated Balance Sheet

As of September 30, 2015 and December 31, 2014

($ amounts in thousands, except per share data, and unaudited)

September 30, 2015

December 31, 2014

Assets

(Unaudited)

Investment properties:

  Land

$

372,698

319,624

  Building and other improvements

2,845,901

2,589,288

  Construction in progress

40,362

39,736

  Total

$

3,258,961

2,948,648

  Less: accumulated depreciation

(565,643)

(463,342)

  Net investment properties

$

2,693,318

2,485,306

Cash and cash equivalents

99,430

163,053

Restricted cash and escrows

83,141

87,296

Accounts and rents receivable, net of allowance of $271 and $251, respectively

33,658

24,407

Intangible assets, net of accumulated amortization of $16,146 and $15,143, respectively

61,759

64,541

Deferred tax asset

1,853

2,393

Other assets

43,446

28,204

Assets held for sale

95,335

100,551

Total assets (including $71,660 and $41,054, respectively, related to consolidated variable interest entities)

$

3,111,940

$

2,955,751

Liabilities

Debt

$

1,186,342

1,232,012

Accounts payable and accrued expenses

94,797

90,848

Distributions payable

25,684

Other liabilities

37,023

43,530

Liabilities associated with assets held for sale

67,358

68,440

Total liabilities (including $46,323 and $27,679, respectively, related to consolidated variable interest entities)

1,411,204

1,434,830

Commitments and contingencies

Stockholders' equity

Preferred stock, $0.01 par value (liquidation preference of $1,000), 50,000,000 shares authorized and 0 issued or outstanding as of September 30, 2015 and 0 shares authorized, issued or outstanding as of December 31, 2014

$

Common stock, $0.01 par value, 500,000,000 shares authorized, 111,671,372 issued and outstanding as of September 30, 2015 and 100,000 shares authorized, 1,000 issued and outstanding as of December 31, 2014

1,117

Additional paid in capital

1,993,067

1,781,427

Distributions in excess of retained earnings

(305,005)

(264,161)

Total Company stockholders' equity

$

1,689,179

$

1,517,266

Non-controlling interests

11,557

3,655

Total equity

$

1,700,736

$

1,520,921

Total liabilities and equity

$

3,111,940

$

2,955,751

See accompanying notes to the combined condensed consolidated financial statements in the Company's Form 10-Q.

 

Xenia Hotels & Resorts, Inc.

Combined Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2015 and 2014

($ amounts in thousands, except per share data, and unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Revenues:

Rooms revenues

$

175,872

$

164,261

$

501,754

$

481,001

Food and beverage revenues

58,500

52,039

185,707

171,379

Other revenues

14,081

14,791

40,089

44,349

Total revenues

$

248,453

$

231,091

$

727,550

$

696,729

Expenses:

Rooms expenses

38,841

36,155

111,378

105,777

Food and beverage expenses

41,308

37,501

122,806

117,250

Other direct expenses

4,625

6,606

13,256

21,191

Other indirect expenses

58,311

54,351

167,758

160,049

Management and franchise fees

12,605

13,198

37,674

39,788

Total hotel operating expenses

155,690

147,811

452,872

444,055

Depreciation and amortization

37,818

35,835

110,094

106,231

Real estate taxes, personal property taxes and insurance

12,985

11,107

36,984

32,666

Ground lease expense

1,272

1,558

3,869

4,096

General and administrative expenses

5,396

10,512

19,443

24,266

Business management fees

1,474

Acquisition transaction costs

4,510

18

5,396

1,150

Pre-opening expenses

825

825

Provision for asset impairment

1,667

4,665

Separation and other start-up related expenses

426

26,887

Total expenses

$

218,922

$

208,508

$

656,370

$

618,603

Operating income

$

29,531

$

22,583

$

71,180

$

78,126

Gain (loss) on sale of investment property

(96)

865

Other income (expense)

672

60

3,389

185

Interest expense

(12,496)

(14,374)

(38,726)

(43,532)

Loss on extinguishment of debt

(113)

(283)

(1,183)

Equity in losses and gain on consolidation of unconsolidated entity, net

4,216

Income before income taxes

17,707

8,060

35,560

38,677

Income tax benefit (expense)

$

140

$

(1,862)

$

(8,344)

$

(5,787)

Net income from continuing operations

17,847

6,198

27,216

32,890

Net income (loss) from discontinued operations

$

$

3,297

$

(489)

$

1,810

Net income

17,847

9,495

26,727

34,700

Less: Net loss attributable to non-controlling interests

$

251

$

$

248

$

Net income attributable to the Company

18,098

9,495

26,975

34,700

Distributions to preferred stockholders

$

(4)

$

(12)

Net income attributable to common stockholders

18,094

9,495

26,963

34,700

 

 

 

Xenia Hotels & Resorts, Inc.

Combined Condensed Consolidated Statements of Operations - Continued

For the Three and Nine Months Ended September 30, 2015 and 2014

($ amounts in thousands, except per share data, and unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Basic and diluted earnings per share

Income from continuing operations available to common stockholders

$

0.16

$

0.05

$

0.24

$

0.29

Income from discontinued operations available to common stockholders

$

$

0.03

$

$

0.02

Net income per share available to common stockholders

$

0.16

$

0.08

$

0.24

$

0.31

Weighted average number of common shares (basic)

111,694,773

113,397,997

112,096,957

113,397,997

Weighted average number of common shares (diluted)

111,885,350

113,397,997

112,258,505

113,397,997

See accompanying notes to the combined condensed consolidated financial statements in the Company's Form 10-Q.

 

Non-GAAP Financial Measures

The Company considers the following useful non-GAAP financial measures to investors as key supplemental measures of operating performance: EBITDA, Adjusted EBITDA, FFO and Adjusted FFO.  These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss, operating profit, cash from operations, or any other operating performance measure as prescribed per GAAP.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in many industries and is defined as net income or loss (calculated in accordance with GAAP) excluding interest expense, provision for income taxes (including income taxes applicable to sale of assets) and depreciation and amortization.  The Company considers EBITDA useful to an investor regarding results of operations, in evaluating and facilitating comparisons of operating performance between periods and between REITs by removing the impact of capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from operating results, even though EBITDA does not represent an amount that accrues directly to common stockholders.  In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions and along with FFO and Adjusted FFO, it is used by management in the annual budget process for compensation programs.

The Company further adjusts EBITDA for certain additional items such as hotel property acquisitions and pursuit costs, amortization of share-based compensation, equity investment adjustments, the cumulative effect of changes in accounting principles, impairment of real estate assets, operating results from properties sold and other costs it believes do not represent recurring operations and are not indicative of the performance of its underlying hotel property entities.  The Company believes Adjusted EBITDA provides investors with another financial measure in evaluating and facilitating comparison of operating performance between periods and between REITs that report similar measures.

FFO and Adjusted FFO

The Company calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income or loss (calculated in accordance with GAAP), excluding real estate-related depreciation, amortization and impairments, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, similar adjustments for unconsolidated partnerships and joint ventures, and items classified by GAAP as extraordinary. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.  The Company believes that the presentation of FFO provides useful supplemental information to investors regarding operating performance by excluding the effect of real estate depreciation and amortization, gains (losses) from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance.  The Company believes that the presentation of FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders.  The calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance.  Additionally, FFO may not be helpful when comparing Xenia to non-REITs.

The Company further adjusts FFO for certain additional items that are not in NAREIT's definition of FFO such as hotel property acquisition and pursuit costs, amortization of debt origination costs and share-based compensation, operating results from properties that are sold and other expenses it believes do not represent recurring operations.  The Company believes that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors' complete understanding of operating performance.

 

Xenia Hotels & Resorts, Inc.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

For the Three and Nine Months Ended  September 30, 2015 and 2014

($ amounts in thousands and unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income attributable to the Company

$

18,098

$

9,495

$

26,975

$

34,700

Adjustments:

Interest expense

12,496

14,374

38,726

43,532

Interest expense from unconsolidated entity

34

Interest expense from discontinued operations

7,888

23,719

Income tax expense (benefit)

(140)

1,862

8,344

5,787

Depreciation and amortization related to investment properties

37,818

35,835

110,094

106,231

Depreciation and amortization related to investment in unconsolidated entity

(102)

Depreciation and amortization of discontinued operations

11,398

36,724

EBITDA

$

68,272

$

80,750

$

184,139

$

250,727

Reconciliation to Adjusted EBITDA

Impairment of investment properties

1,667

4,665

(Gain) loss on sale of investment property

96

(865)

Loss on extinguishment of debt

113

283

1,183

Gain (loss) on consolidation of investment in unconsolidated entity

(4,481)

Acquisition and pursuit costs

4,510

18

5,396

1,150

Amortization of share-based compensation expense

1,326

4,774

Pre-opening expenses (1)

825

825

Management termination fees net of guaranty income(2)

212

212

Gain from excess property insurance recovery

(322)

(598)

Business interruption proceeds net of hotel related expenses (3)

(379)

(2,549)

EBITDA adjustment for three hotels sold in 2014 (4)

(387)

(85)

(1,823)

EBITDA adjustment for Suburban Select Service Portfolio (5)

(22,602)

489

(62,254)

Other non-recurring expenses (6)

426

26,887

Adjusted EBITDA

$

74,870

$

59,655

$

219,773

$

188,302

(1)

For the three and nine months September 30, 2015, the pre-opening expenses related to the Grand Bohemian Hotel Charleston and Grand Bohemian Hotel Mountain Brook, which opened in August and October 2015, respectively.

(2)

For the three and nine months September 30, 2015, we terminated management agreements for four properties and entered into new management contracts with a new third-party hotel operator.  In connection with the terminations, we paid termination fees of $0.7 million, which was offset by $0.5 million in income from the write off of deferred guaranty payments that were previously received from certain of the managers and were being recognized over the term of the old management contracts.

(3)

The business interruption insurance recovery for 2014 for the three and nine months ended September 30, 2015 was $0.4 and $2.5 million, which is net of $1.6 million of hotel related expenses attributable to those hotels impacted by the August 2014 Napa Earthquake.

(4)

The following three hotels were disposed of in 2014: Crowne Plaza Charleston Airport - Convention Center, DoubleTree Suites Atlanta Galleria, and Holiday Inn Secaucus Meadowlands.

(5)

On November 17, 2014, InvenTrust sold the Suburban Select Service Portfolio for an aggregate gross disposition price of $1.1 billion.  Prior to the sale transaction, the Company oversaw the Suburban Select Service Portfolio.  This sale reflected a strategic shift and had a major impact on our consolidated financial statements; therefore the operations of these 52 hotels are reflected as discontinued operations on the combined condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014.

(6)

For the three and nine months September 30, 2015, other non-recurring expenses include one-time costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to the Tender Offer described in Note 10 in the combined condensed consolidated financial statements as of September 30, 2015 and 2014, and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company.

   

 

Xenia Hotels & Resorts, Inc.

Reconciliation of Net Income to FFO and Adjusted FFO

For the Three and Nine Months Ended September 30, 2015 and 2014

($ amounts in thousands and unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income attributable to the Company

$

18,098

$

9,495

$

26,975

$

34,700

Adjustments:

Depreciation and amortization related to investment properties

37,818

35,835

110,094

106,231

Depreciation and amortization related to investment in unconsolidated entity

(102)

Depreciation and amortization of discontinued operations

11,398

36,724

Impairment of investment property

1,667

4,665

(Gain) loss on sale of investment property

96

(865)

Gain on consolidation of investment in unconsolidated entity

(4,481)

FFO

$

55,916

$

58,389

$

137,069

$

176,974

Distribution to preferred shareholders

(4)

(12)

FFO available to common share and unit holders

$

55,912

$

58,389

$

137,057

$

176,974

Reconciliation to Adjusted FFO

Loss on extinguishment of debt

113

283

1,183

Acquisition and pursuit costs

4,510

18

5,396

1,150

Loan related costs (1)

681

991

2,872

3,405

Amortization of share-based compensation expense

1,326

4,774

Pre-opening expenses

825

825

Management termination fees net of guaranty income(2)

212

212

Income tax related to restructuring (3)

1,900

Business interruption proceeds net of hotel related expenses (4)

(379)

(2,549)

Less FFO adjustment for three hotels sold in 2014 (5)

(387)

(85)

(1,575)

Less FFO adjustment for Suburban Select Service Portfolio (6)

(14,713)

489

(38,534)

Other non-recurring expenses (7)

426

26,887

Adjusted FFO

$

63,513

$

44,411

$

178,061

$

142,603

(1)

Loan related costs included amortization of debt discounts, premiums and deferred loan origination costs.

(2)

For the three and nine months September 30, 2015, we terminated management agreements for four properties and entered into new management contracts with a new third-party hotel operator.  In connection with the terminations, we paid termination fees of $0.7 million, which was offset by $0.5 million in income from the write off of deferred guaranty payments that were previously received from certain of the managers and were being recognized over the term of the old management contracts.

(3)

For the nine months ended September 30, 2015, the Company recognized income tax expense of $8.3 million, of which $1.9 million related to a gain on the transfer of a hotel between legal entities resulting in a more optimal structure in connection with the Company's intention to elect to be taxed as a REIT.

(4)

The business interruption insurance recovery for the three and nine months ended September 30, 2015 was $0.4 and $2.5 million, which is net of $1.6 million of hotel related expenses attributable to those hotels impacted by the August 2014 Napa Earthquake.

(5)

The following three hotels were disposed of in 2014: Crowne Plaza Charleston Airport - Convention Center, DoubleTree Suites Atlanta Galleria, and Holiday Inn Secaucus Meadowlands.

(6)

On November 17, 2014, InvenTrust sold the Suburban Select Service Portfolio for an aggregate gross disposition price of $1.1 billion.  Prior to the sale transaction, the Company oversaw the Suburban Select Service Portfolio.  This sale reflected a strategic shift and had a major impact on our consolidated financial statements; therefore the operations of these 52 hotels are reflected as discontinued operations on the combined condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014.

(7)

For the three and nine months ended September 30, 2015, other non-recurring expenses include one-time costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to the Tender Offer described in Note 10 in the combined condensed consolidated financial statements as of September 30, 2015 and 2014, and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company. 

 

 

 

Xenia Hotels & Resorts, Inc.

Debt Summary

(unaudited, $ in thousands)

Rate Type (1)

Rate

Fully Extended Maturity Date(2)

Outstanding as of 9/30/2015

Outstanding as of 11/12/2015

Mortgage Loans

Hilton Garden Inn Chicago North Shore/Evanston

 Fixed

5.94%

June 2016

$

18,553

$

Grand Bohemian Hotel Orlando

 Fixed

5.82%

October 2016

49,601

49,443

Marriott Woodlands Waterway Hotel & Convention Center

 Fixed

4.50%

December 2016

72,975

Renaissance Atlanta Waverly Hotel & Convention Center

 Fixed

5.50%

December 2016

97,000

97,000

Renaissance Austin Hotel

 Fixed

5.51%

December 2016

83,000

83,000

Hyatt Regency Orange County

 Fixed

5.25%

January 2017

61,994

Residence Inn Boston Cambridge

 Fixed

5.50%

(3)

February 2017

(3)

30,339

63,000

Courtyard Pittsburgh Downtown

 Fixed

4.00%

March 2017

22,776

22,719

Hampton Inn & Suites Denver Downtown

 Fixed

5.25%

March 2017

13,403

Marriott Griffin Gate Resort & Spa

 Variable

2.69%

March 2017

34,556

34,495

Marriott San Francisco Airport Waterfront

 Fixed

5.40%

April 2017

53,034

Courtyard Birmingham Downtown at UAB

 Fixed

5.25%

April 2017

13,428

13,403

Hilton University of Florida Conference Center Gainesville

 Fixed

6.46%

February 2018

27,775

27,775

Residence Inn Denver City Center

 Variable

2.44%

April 2018

45,210

45,210

Bohemian Hotel Savannah Riverfront

 Variable

2.54%

December 2018

27,480

27,480

Fairmont Dallas

 Variable

2.19%

April 2019

56,389

56,332

Andaz Savannah

 Variable

2.19%

January 2020

21,500

21,500

Hotel Monaco Denver

 Variable

2.29%

January 2020

41,000

41,000

Andaz Napa

 Variable

2.29%

March 2020

30,500

38,000

Marriott Dallas City Center

 Variable

2.44%

May 2020

40,090

40,090

Marriott Charleston Town Center

 Fixed

3.85%

July 2020

16,994

16,956

Hyatt Regency Santa Clara

 Variable

2.19%

September 2020

60,200

60,200

Grand Bohemian Hotel Charleston (JV)(4)

 Variable

2.69%

November 2020

19,182

19,798

Loews New Orleans Hotel

 Variable

2.54%

November 2020

37,500

37,500

Grand Bohemian Hotel Mountain Brook (JV)(5)

 Variable

2.69%

December 2020

21,661

22,736

Hotel Monaco Chicago

 Variable

2.44%

January 2021

26,000

26,000

Westin Galleria & Oaks Houston

 Variable

3.34%

May 2021

110,000

110,000

Total Mortgage Loans

3.93%

(6)

$

1,132,140

$

953,637

Mortgage Loan Premium / (Discounts)(7)

(805)

(805)

Senior Unsecured Credit Facility

 Variable

1.85%

February 2020

117,000

Term Loan (Unsecured)

Hedged

2.89%

(8)

February 2021

175,000

Term Loan (Unsecured)

 Variable

2.09%

October 2022

(9)

Total Debt

3.73%

(6)

$

1,248,335

$

1,127,832

 

 

Xenia Hotels & Resorts, Inc.

Debt Summary - Continued

(1)

Floating index is one month LIBOR. As of September 30, the Company did not have any hedging instruments in place.

(2)

Loan extension is at the discretion of Xenia. The majority of loans require minimum debt service coverage ratio and/or loan to value maximums and payment of extension fee.

(3)

Company refinanced mortgage with a new loan bearing a 4.48% fixed interest rate and October 2025 maturity.

(4)

The project construction loan has a total draw capacity of $20.0 million.

(5)

The project construction loan has a total draw capacity of $26.3 million.

(6)

Weighted average interest rate as of September 30, 2015.

(7)

Loan premiums/(discounts) on assumed mortgages recorded in purchase accounting.

(8)

Company has executed a swap to fix LIBOR at 1.29% over the period of the loan.

(9)

Funding anticipated in early 2016 in connection with the acquisition of the Hotel Commonwealth.

 

 

 

Xenia Hotels & Resorts, Inc.

Same-Property(1) Hotel EBITDA and Hotel EBITDA Margin

For the Three and Nine Months Ended September 30, 2015 and 2014

($ in thousands and unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

Change

2015

2014

Change

Revenues(2):

Room revenues

$

177,511

$

170,785

3.9

%

$

519,904

$

501,110

3.8

%

Food and beverage revenues

58,908

55,314

6.5

%

193,041

179,455

7.6

%

Other revenues

14,016

15,117

(7.3)%

40,687

44,759

(9.1)%

Total revenues

$

250,435

$

241,216

3.8

%

$

753,632

$

725,324

3.9

%

Expenses(2):

Room expenses

$

39,230

$

37,466

4.7

%

$

115,627

$

110,682

4.5

%

Food and beverage expenses

41,642

39,914

4.3

%

128,391

123,497

4.0

%

Other direct expenses

4,614

6,746

(31.6)%

13,498

21,748

(37.9)%

Other indirect expenses

58,685

55,667

5.4

%

173,703

164,756

5.4

%

Management and franchise fees

12,670

13,506

(6.2)%

38,533

40,443

(4.7)%

Real estate taxes, personal property taxes and insurance

12,870

11,242

14.5

%

37,429

33,130

13.0

%

Ground lease expense

987

1,344

(26.6)%

3,584

3,768

(4.9)%

Total hotel operating expenses

$

170,698

$

165,885

2.9

%

$

510,765

$

498,024

2.6

%

Hotel EBITDA

$

79,737

$

75,331

5.8

%

$

242,867

$

227,300

6.8

%

Hotel EBITDA Margin

31.8

%

31.2

%

60 bps

32.2

%

31.3

%

90 bps

(1)

"Same-Property" results include the results for all hotels owned as of September 30, 2015, except for the Grand Bohemian Hotel Charleston and one hotel under development, include periods prior to the Company's ownership of the Aston Waikiki Beach Resort, RiverPlace Hotel, Canary 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. "Same-Property" results also exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation and remediation disruption.

(2)

2014 revenues and expenses are unadjusted for changes resulting from the adoption of USALI.

 

    

Xenia Hotels & Resorts, Inc.

Hotel Data by Geography(1)

As of September 30, 2015

(unaudited)

September 30, 2015

Region

Number of Hotels

Number of Rooms

South Atlantic

(Florida, Georgia, Maryland, South Carolina, Virginia, West Virginia, Washington, D.C.)

16

3,319

West South Central

(Louisiana, Texas)

9

3,339

Pacific

(California, Hawaii, Oregon)

9

3,247

Mountain

(Arizona, Colorado, Utah)

5

1,016

Other

(Alabama, Illinois, Iowa, Kansas, Massachusetts, Missouri, Pennsylvania

11

2,183

Total

50

13,104

(1)

Excludes one hotel under development.

 

 

Xenia Hotels & Resorts, Inc.

Same-Property(1) Hotel Statistical Data(2) by Geography

For the Three and Nine Months Ended September 30, 2015 and 2014

(unaudited)

Three Months Ended

Three Months Ended

September 30, 2015

September 30, 2014

% Change

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

RevPAR

Region

South Atlantic

79.4

%

$

167.39

$

132.92

79.1

%

$

164.39

$

129.99

2.3

%

West South Central

67.3

%

$

175.21

$

117.87

70.2

%

$

171.50

$

120.46

(2.2)

%

Pacific

88.4

%

$

217.81

$

192.46

85.5

%

$

201.57

$

172.35

11.7

%

Mountain

79.8

%

$

182.36

$

145.60

80.8

%

$

172.48

$

139.33

4.5

%

Other

82.6

%

$

182.14

$

150.49

82.1

%

$

176.32

$

144.71

4.0

%

Total

79.1

%

$

186.85

$

147.81

79.0

%

$

178.71

$

141.26

4.6

%

Nine Months Ended

Nine Months Ended

September 30, 2015

September 30, 2014

% Change

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

RevPAR

Region

South Atlantic

79.3

%

$

177.95

$

141.09

79.2

%

$

170.59

$

135.14

4.4

%

West South Central

72.4

%

$

187.06

$

135.42

73.6

%

$

182.88

$

134.51

0.7

%

Pacific

81.1

%

$

207.02

$

167.81

83.2

%

$

190.07

$

158.07

6.2

%

Mountain

81.2

%

$

178.44

$

144.88

81.2

%

$

167.87

$

136.27

6.3

%

Other

77.1

%

$

177.79

$

137.07

75.7

%

$

169.46

$

128.24

6.9

%

Total

77.7

%

$

187.67

$

145.91

78.3

%

$

178.28

$

139.61

4.5

%

(1)

"Same-Property" results include the results for all hotels owned as of September 30, 2015, except for the Grand Bohemian Hotel Charleston and one hotel under development, include periods prior to the Company's ownership of the Aston Waikiki Beach Resort, RiverPlace Hotel, Canary 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. "Same-Property" results also exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation and remediation disruption.

(2)

Average Daily Rate ("ADR") and Revenue Per Available Room ("RevPAR") for the three and nine months ended September 30, 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.

 

 

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SOURCE Xenia Hotels & Resorts, Inc.



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