Xenia Hotels & Resorts Reports First Quarter Results

ORLANDO, Fla., May 9, 2017 /PRNewswire/ -- Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the first quarter ended March 31, 2017.

First Quarter 2017 Highlights

• Net Income: Net income attributable to common stockholders was $8.1 million and net income per diluted share was $0.07.
• Same-Property RevPAR: Same-Property RevPAR increased 2.7% compared to the first quarter of 2016 to $147.14, as occupancy increased 123 basis points and ADR increased 1.0%. Excluding the Company's Houston-area hotels, Same-Property RevPAR also increased 2.7%, as occupancy increased 146 basis points and ADR increased 0.7%.
• Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 29.9%, an increase of 68 basis points compared to the first quarter of 2016.
• Total Portfolio RevPAR: Total Portfolio RevPAR was 6.1% higher than in the first quarter of 2016, reflecting improvements in portfolio performance and composition.
• Adjusted EBITDA: Adjusted EBITDA declined $3.4 million to $59.1 million, a decrease of 5.5% primarily due to net asset dispositions in 2016.
• Adjusted FFO per Diluted Share: Adjusted FFO per diluted share increased 2.3% to $0.44 per diluted share compared to the first quarter of 2016.
• Dividends: The Company declared its first quarter dividend of $0.275 per share to common stockholders of record on March 31, 2017.

"We are pleased with the performance of our portfolio during the quarter and remain focused on enhancing bottom-line efficiency, as demonstrated by our continued margin improvement," commented Marcel Verbaas, President and Chief Executive Officer of Xenia.  "Our Houston-area hotels experienced positive RevPAR growth for the quarter as our assets benefited from Super Bowl LI and the Easter shift into April.  Additionally, we had several markets that outperformed the overall lodging industry during the quarter. We have made significant strides in upgrading the quality of our portfolio over the past several years and continued this theme through the sale of the Courtyard Birmingham at UAB which was completed in April.  We will look to continue improving the quality of our portfolio through transactions as well as capital expenditures during 2017 and beyond."

Operating Results

The Company's results include the following:

Transactions:

During the first quarter, the Company did not complete any acquisitions or dispositions.

In April 2017, the Company sold the 122-room Courtyard Birmingham Downtown at UAB for a sale price of $30 million.  The price represented an 11.4x EBITDA multiple on a trailing-twelve-month basis as of March 31, 2017.  In addition, the Company retained the $1.1 million balance in the hotel's capital expenditure reserve account.

Financings and Balance Sheet

In February, 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, through the maturity date of the loans in January 2022.

As of March 31, 2017, the Company had total outstanding debt of $1.1 billion with a weighted average interest rate of 3.48%.  In addition, the Company had $202.4 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 unsecured credit facility) was 3.3x.

Subsequent to quarter end, the Company closed a $115 million 10-year, fixed rate mortgage loan collateralized by the Marriott San Francisco Airport Waterfront.  The loan bears an interest rate of 4.63% and matures in May 2027.

Also in April, the Company paid off the $45 million mortgage loan collateralized by the Residence Inn Denver City Center and the $27 million mortgage loan collateralized by the Bohemian Hotel Savannah Riverfront.

Proceeds from the Marriott San Francisco Airport Waterfront financing and disposition of the Courtyard Birmingham Downtown at UAB will be utilized for general corporate purposes which may include share repurchases under the Company's existing repurchase authorization, debt repayments, and acquisitions consistent with the Company's long-term strategy of investing in high-quality assets primarily located in top 25 lodging markets and key leisure destinations.

"The strength of our balance sheet continues to be a competitive advantage for the company.   We recently completed a new secured financing, which, together with the payoff of two smaller secured loans, increased the weighted-average duration to initial maturity of our debt to 4.8 years and lowered the mix of variable-rate debt to our target of approximately 25%.   We are pleased with the evolution of our balance sheet and believe that it positions us well to take advantage of opportunities as they may arise," commented Atish Shah, Chief Financial Officer for Xenia.

Capital Expenditures

During the first quarter, the Company invested $15 million in its portfolio.  The Company completed the guestroom renovations at the Andaz San Diego and Bohemian Hotel Celebration, as well as several smaller projects throughout the portfolio.  The Company continued the guestroom renovation at the Westin Galleria Houston, including the conversion of 18 guestrooms into nine suites resulting in a reduction in our total room count. Throughout the course of the renovation, the hotel's room count will be reduced by 18 keys through the creation of new suites.  Additionally, the Company substantially completed the meeting space renovation at the Marriott San Francisco Airport Waterfront and made significant progress in the planning of several large-scale renovations expected to commence in the second half of the year.

Share Repurchases

During the first quarter, the Company purchased 107,509 shares of common stock under its share repurchase authorization for an aggregate purchase price of $1.8 million.

Year to date through May 5, 2017, the Company repurchased a total of 160,983 shares of common stock at a weighted average price of $16.69 per share, for total consideration of $2.7 million.  As of May 5, 2017, the Company had approximately $98.3 million in capacity under its repurchase authorization.

2017 Outlook and Guidance

The Company is updating its guidance for 2017 to reflect the disposition of the Courtyard Birmingham Downtown at UAB and the Company's first quarter performance, while maintaining its operating and financial expectations for the remainder of the year.  The Company's outlook for 2017 is based on the current economic environment, incorporates all expected renovation disruption, and assumes no additional acquisitions, dispositions, equity offerings, or share repurchases. RevPAR change includes all 41 hotels owned as of May 9, 2017.

Additional guidance details:

• Average RevPAR declines of 7% to 10% at the Company's Houston-area hotels, due to the impact of continued weakness in corporate demand, the addition of new supply, and disruption due to renovations at the Westin Galleria and Westin Oaks. The Company's Houston-area hotels are expected to negatively impact portfolio RevPAR change by approximately 85 basis points.
• Disruption due to renovations is expected to negatively impact portfolio RevPAR change by approximately 50 basis points.
• General and administrative expense of $22 million to $24 million, excluding non-cash share-based compensation.
• Interest expense of approximately $42 million, excluding non-cash loan related costs.
• Income tax expense of approximately $6 million.

First Quarter 2017 Earnings Call

The Company will conduct its quarterly conference call on Tuesday, May 9, 2017 at 12:00 PM 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 lodging markets as well as key leisure destinations in the United States. The Company owns 41 hotels, including 39 wholly owned hotels, comprising 10,780 rooms, across 20 states and the District of Columbia. Xenia's hotels are operated and/or licensed by industry leaders such as Marriott®, Kimpton®, Hyatt®, Aston®, Fairmont®, Hilton®, and Loews®, as well as leading independent management companies including Sage Hospitality, The Kessler Collection, Urgo Hotels & Resorts, Davidson Hotels & Resorts 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 "guidance," 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 growth, Net Income, Adjusted EBITDA, Adjusted FFO, Adjusted FFO per share, 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, (ix) levels of spending in business and leisure segments as well as consumer confidence (x) declines in occupancy and average daily rate, (xi) the seasonal and cyclical nature of the real estate and hospitality businesses, (xii) changes in distribution arrangements, such as through Internet travel intermediaries, (xiii) relationships with labor unions and changes in labor laws, and (xiv) 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.

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, Same Property Hotel EBITDA, Same-Property Hotel EBITDA Margin, FFO, Adjusted FFO, and Adjusted FFO per diluted share.  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 presents EBITDA attributable to common stock and unit holders, which includes its Operating Partnership units because its Operating Partnership units may be redeemed for common stock.  The Company believes it is meaningful for the investor to understand EBITDA attributable to all common stock and Operating Partnership units.

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.

Hotel EBITDA and Hotel EBITDA Margin

The Company calculates Hotel EBITDA in accordance with the current edition of USALI, which is defined as net income or loss (calculated in accordance with GAAP) after adding back replacement reserves.  Hotel EBITDA Margin is calculated by dividing Hotel EBITDA by Total Revenues.

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 presents FFO attributable to common stock and unit holders, which includes its Operating Partnership units because its Operating Partnership units may be redeemed for common stock.  The Company believes it is meaningful for the investor to understand FFO attributable to all common stock and Operating Partnership units.

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.

Adjusted FFO per diluted share

The Company calculates Adjusted FFO per diluted share by dividing the Adjusted FFO for the respective period by the diluted weighted average number of common stock shares for the corresponding period.  The Company's diluted weighted average number of common shares outstanding is calculated by taking the weighted average of the common stock outstanding for the respective period plus the effect of any dilutive securities.  Any anti-dilutive securities are excluded from the diluted earnings per-share calculation.

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SOURCE Xenia Hotels & Resorts, Inc.