Xenia Hotels & Resorts Completes Disposition of Lorien Hotel & Spa

Rhea-AI Summary

Xenia Hotels & Resorts (NYSE: XHR) announced the sale of Lorien Hotel & Spa in Alexandria, VA for $30 million, equating to approximately $280,000 per room. The transaction reflects a 21.3x multiple and a 3.1% capitalization rate based on Hotel EBITDA and Net Operating Income over the last twelve months. The proceeds will be used for general corporate purposes such as share repurchases, debt repayment, capital expenditures, and acquisitions. Xenia owns 31 luxury and upper upscale hotels with 9,408 rooms across 14 states.

Positive

• Sale of Lorien Hotel & Spa for $30 million, enhancing liquidity.
• Proceeds may be used for share repurchases, debt repayment, capital expenditures, and acquisitions.
• Reflects a 21.3x multiple and 3.1% capitalization rate, indicating strong financial metrics.

Negative

• Sale reduces the number of hotels in Xenia’s portfolio.

Insights

Financial Analyst

The sale of the Lorien Hotel & Spa for $30 million is a significant transaction for Xenia Hotels & Resorts. The per-key price of $280,000 aligns well with market expectations for luxury properties in the Alexandria area. The 21.3x EBITDA multiple and the 3.1% capitalization rate are both worth noting. Generally, a high EBITDA multiple indicates a strong financial performance or significant future growth potential, while a low capitalization rate can imply a high valuation relative to the income generated. The low cap rate, in this case, suggests that the Lorien Hotel was highly valued by the buyer, indicating strong confidence in its future performance.

From a financial perspective, the use of the proceeds for general corporate purposes provides flexibility. Whether for share repurchases, debt repayment, or capital expenditures, these actions can potentially improve the company's financial health and shareholder value. Share repurchases, for instance, can increase earnings per share, making the stock more attractive. Debt repayment reduces financial leverage and interest expenses, while capital expenditures and acquisitions can drive future growth.

However, investors should also be cautious. The sale reduces Xenia’s asset base and the company must effectively utilize the proceeds to maintain or enhance its value. If the funds are not strategically used, it might not translate into shareholder value.

Real Estate Market Analyst

This transaction highlights interesting dynamics within the luxury and upper upscale hotel segment. The $280,000 per room valuation is an insightful metric for comparing similar properties. Luxury hotel investments often hinge on location, brand affiliation and property condition. Alexandria, VA is a desirable location and the premium price per key reflects its market attractiveness.

The low 3.1% capitalization rate also mirrors the broader trend in the real estate market where investors are willing to pay a premium for high-quality assets in prime locations, expecting stable long-term returns. This sale could set a new benchmark for future hotel transactions in the region, affecting how similar properties are valued.

Real estate investors should note the strategic importance of this disposition within Xenia’s portfolio. By divesting a single asset, Xenia may be optimizing its portfolio to focus on core markets or properties with higher growth potential. Diversification and strategic asset management are key to maintaining a resilient and profitable real estate portfolio.

ORLANDO, Fla., July 9, 2024 /PRNewswire/ -- Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced it has completed the disposition of the 107-room Lorien Hotel & Spa in Alexandria, VA, for $30 million, or approximately $280,000 per key. The sale price represents a 21.3x multiple and a 3.1% capitalization rate on Hotel EBITDA and Net Operating Income for the trailing twelve months ended May 31, 2024, respectively.

Proceeds will be utilized for general corporate purposes, which may include share repurchases, debt repayment, capital expenditures and acquisitions consistent with the Company's long-term strategy.

About Xenia Hotels & Resorts, Inc.
Xenia Hotels & Resorts, Inc. is a self-advised and self-administered REIT that invests in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States. The Company owns 31 hotels comprising 9,408 rooms across 14 states. Xenia's hotels are in the luxury and upper upscale segments, and operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton, Fairmont, Loews, Hilton, and The Kessler Collection. For more information on Xenia's business, refer to the Company website at www.xeniareit.com.

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

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SOURCE Xenia Hotels & Resorts, Inc.

FAQ

What is the significance of Xenia's sale of Lorien Hotel & Spa?

Xenia sold Lorien Hotel & Spa for $30 million, which is expected to be used for share repurchases, debt repayment, capital expenditures, and acquisitions, aligning with the company's long-term strategy.

How much did Xenia sell Lorien Hotel & Spa for?

Xenia sold Lorien Hotel & Spa for $30 million, or approximately $280,000 per room.

What is the financial impact of Xenia's sale of Lorien Hotel & Spa?

The sale reflects a 21.3x multiple and a 3.1% capitalization rate based on the hotel's EBITDA and Net Operating Income, indicating strong financial performance.

What will Xenia do with the proceeds from the Lorien Hotel & Spa sale?

Xenia plans to use the proceeds for general corporate purposes, including share repurchases, debt repayment, capital expenditures, and acquisitions.

How does the sale of Lorien Hotel & Spa affect Xenia's portfolio?

The sale reduces the total number of hotels in Xenia's portfolio but provides significant liquidity for strategic investments.