Attached files
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| 8-K - 8-K - Xenia Hotels & Resorts, Inc. | d925557d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
DATE: May 14, 2015
XENIA HOTELS & RESORTS REPORTS FIRST QUARTER 2015 RESULTS
Orlando, FL – May 14, 2015 – Xenia Hotels & Resorts, Inc. (NYSE: XHR) (“Xenia” or the “Company”) today announced results for the three months ended March 31, 2015. The Company’s results include the following:
| For the three months ended March 31, |
||||||||||||
| 2015 | 2014 | Change | ||||||||||
| ($ in millions except per share share/unit data) | ||||||||||||
| Same-Property Number of Hotels |
46 | 46 | ||||||||||
| Same-Property Occupancy |
73.9 | % | 75.6 | % | (2.3 | %) | ||||||
| Same-Property Average Daily Rate(1) |
$ | 182.16 | $ | 173.39 | 5.1 | % | ||||||
| Same-Property RevPAR(1) |
$ | 134.59 | $ | 131.13 | 2.6 | % | ||||||
| Same-Property Hotel EBITDA(2) |
$ | 69,881 | $ | 65,033 | 7.5 | % | ||||||
| Same-Property Hotel EBITDA Margin(2) |
30.7 | % | 29.6 | % | 112 | bps | ||||||
| Adjusted EBITDA(2) |
$ | 64,727 | $ | 56,155 | 15.3 | % | ||||||
| Adjusted FFO(2) |
$ | 50,787 | $ | 41,052 | 23.7 | % | ||||||
| Adjusted FFO per diluted share(2) |
$ | 0.45 | $ | 0.36 | 24.2 | % | ||||||
| Net (loss) income to common shareholders(3) |
$ | (14,866 | ) | $ | 2,319 | (741.1 | %) | |||||
| Net (loss) income to common shareholders per diluted share(3) |
$ | (0.13 | ) | $ | 0.02 | (743.5 | %) | |||||
| (1) | Three months ended March 31, 2014 is unadjusted for changes resulting from the adoption of the 11th edition of the Uniform System of Accounts for the Lodging Industry (“USALI”). |
| (2) | See tables later in this press release for reconciliations from net income (loss) to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Funds From Operations (“FFO”), Adjusted FFO, and Adjusted FFO per share/unit. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO per share/unit and hotel EBITDA are non-GAAP financial measures. |
| (3) | Includes $25.3 million of one-time general and administrative expenses. See accompanying notes to the combined consolidated financial statements in the Company’s Form 10Q for more detail. |
“Same-Property” results include the results for all hotels owned as of March 31, 2015, except for the two hotels under development, include periods prior to the Company’s ownership of the Aston Waikiki Beach Resort, and exclude the results of operations of the Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus, all of which were disposed of in 2014. Results also include renovation and remediation disruption, and exclude the NOI guaranty payment at one hotel.
The Company’s historical financial statements 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.
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First Quarter 2015 Highlights
| • | Separation from InvenTrust: The Company successfully completed the spin-off from its former parent InvenTrust (formerly Inland American Real Estate Trust, Inc.) 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 and rang The Opening Bell to celebrate the first day of trading. |
| • | 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 2.6% from the first quarter in 2014 to $134.59, reflecting a 5.1% increase in ADR partially offset by a 2.3% decrease in occupancy. The Company estimates USALI reclassifications negatively impacted RevPAR growth by a minimum of 100 bps. The Company also estimates that RevPAR growth was negatively impacted by approximately 300 bps year-over-year due to the renovation disruption at three of its largest hotels. |
| • | Same-Property Hotel EBITDA Margin: Same-property hotel EBITDA margin was 30.7%, an increase of 112 basis points from the same period in 2014. |
| • | Adjusted EBITDA: Adjusted EBITDA was $64.7 million. |
| • | Adjusted FFO: Adjusted FFO available to common stockholders per diluted share was $0.45. |
| • | Dividends: The Company declared a pro rata quarterly dividend of $0.1457 per share on March 13, which represents an anticipated regular quarterly dividend of $0.23 per share prorated for the period from completion of separation from InvenTrust and the last day of the first quarter. The dividend was paid on April 15, 2015. |
| • | Capital Investments: The Company invested $16.4 million in its hotels and completed two significant capital projects. The Hyatt Regency Santa Clara and the Aston Waikiki Beach Resort projects were completed during the quarter and, among other projects, the Company also created three new rooms at the Hyatt Regency Orange County. The Marriott San Francisco Airport Waterfront renovation progressed significantly, with full completion, including the addition of three guest rooms, anticipated in the second quarter of 2015. |
“We are pleased with our first quarter results, and more specifically with our ADR growth of 5.1% and strong-flow through at the hotel level.” said Marcel Verbaas, President and Chief Executive Officer of Xenia Hotels & Resorts. “Our strong year-over-year ADR growth helped offset a slight decrease in occupancy due to several significant capital investment projects ongoing throughout the quarter. We are optimistic as we look forward to the remainder of 2015 and are confident in our ability to take advantage of continued positive lodging industry dynamics.”
During the first quarter, the Company had total general and administrative expenses of $7.0 million, which includes $1.7 million of amortization of share-based compensation for management and the board of directors. In addition, the Company had $25.3 million of one-time expenses associated with the separation from InvenTrust, listing on the NYSE, completion of the Dutch tender offer and other start-up costs incurred while transitioning to an independent, publicly-traded company.
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Also during the first quarter, the Company recorded business interruption insurance proceeds of $3.7 million related to the estimated losses at the Andaz Napa, which was impacted by the August 2014 earthquake in Northern California. The Company anticipates receiving approximately $5.0 to $6.0 million of business interruption insurance proceeds for losses suffered in 2014. The Company has spent approximately $7.3 million through the end of the first quarter to remediate the damage at the two hotels, all of which is expected to be reimbursed through property insurance proceeds.
Hotels Under Development
The Grand Bohemian Charleston, a 50-room Autograph Collection hotel located in Charleston, South Carolina in which Xenia owns a 75% interest, is expected to open in the third quarter of 2015. Total costs to develop the hotel are estimated to be approximately $30 million, of which $23.9 million has been incurred to date.
The Grand Bohemian Mountain Brook, a 100-room Autograph Collection hotel located in an upscale suburb of Birmingham, Alabama in which Xenia owns a 75% interest, is expected to open in the fourth quarter of 2015. Total costs to develop the hotel are estimated to be approximately $43 million, of which $27.3 million has been incurred to date.
Capital Investments
The Company invested $16.4 million of capital in its hotels during the first quarter 2015 (excluding expenditures to remediate the Napa earthquake damage) and completed two significant capital projects. The Hyatt Regency Santa Clara completed a $7.6 million guest room renovation and the Aston Waikiki Beach Resort completed a $2.3 million pool deck renovation, both of which were started in the fourth quarter of 2014. The $18.3 million Marriott San Francisco Airport Waterfront renovation has also been underway since the fourth quarter of 2014, and significant progress has been made on its guest room renovation and bathroom conversion project, with full completion and the addition of three guest rooms anticipated in the second quarter of 2015. Additionally during the quarter, the Company created three new rooms at the Hyatt Regency Orange County as a result of conversion of a former general manager’s apartment.
Balance Sheet
As of March 31, 2015, the Company had total outstanding debt of $1.2 billion, with no outstanding borrowings on its $400 million senior unsecured credit facility and a weighted average interest rate of 4.01%. Total net debt to trailing 12 month pro forma Corporate EBITDA (as defined in the Company’s senior unsecured credit facility) was 3.7x as of March 31, 2015. As of March 31, 2015, the Company had $238.1 million of cash and cash equivalents.
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2015 Outlook and Guidance
The Company’s outlook for 2015 is based on the current economic environment, incorporates all expected renovation disruption, assumes no acquisitions or dispositions, and includes the completion of its two development properties, both of which are anticipated in the second half of the year. The Company’s 2015 capital expenditure range includes the renovation projects during the quarter, but excludes earthquake damage remediation at the Andaz Napa. The Company’s financial expectations for 2015 are as follows:
| Low End | High End | |||||||
| ($ in millions) | ||||||||
| RevPAR growth |
5.0 | % | 7.0 | % | ||||
| Adjusted EBITDA |
$ | 275.0 | $ | 295.0 | ||||
| Adjusted FFO |
$ | 212.0 | $ | 232.0 | ||||
| Capital Expenditures |
$ | 50.0 | $ | 60.0 | ||||
First Quarter 2015 Earnings Call
The Company will conduct its quarterly conference call on Thursday, May 14, 2015 at 11:00 AM eastern time. To participate in the conference call, please dial (888) 317-6016. 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. As of March 31, 2015 we owned 46 hotels, comprising 12,639 rooms, across 19 states and the District of Columbia, and had a majority interest in two hotels under development. Our 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, under various nationally recognized brands. For more information on our 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” 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 FFO, adjusted EBITDA and derivations thereof, financial performance, prospects or future events. Such forward-looking
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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.
Contact:
Lisa Ramey, Vice President Finance, Xenia Hotels & Resorts, (407) 317-6950
For additional information or to receive press releases via email, please visit our website at
www.xeniareit.com
###
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Xenia Hotels & Resorts, Inc.
Combined Condensed Consolidated Balance Sheets
As of March 31, 2015 and December 31, 2014
($ amounts in thousands, except per share data)
| March 31, 2015 | December 31, 2014 | |||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Investment properties: |
||||||||
| Land |
$ | 337,093 | $ | 338,313 | ||||
| Building and other improvements |
2,727,741 | 2,710,647 | ||||||
| Construction in progress |
50,840 | 39,736 | ||||||
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|
|
|
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| Total |
$ | 3,115,674 | $ | 3,088,696 | ||||
| Less: accumulated depreciation |
(541,245 | ) | (505,986 | ) | ||||
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|
|
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| Net investment properties |
$ | 2,574,429 | $ | 2,582,710 | ||||
| Cash and cash equivalents |
238,132 | 163,053 | ||||||
| Restricted cash and escrows |
82,944 | 87,296 | ||||||
| Accounts and rents receivable, net of allowance of $285 and $251, respectively |
35,032 | 26,504 | ||||||
| Intangible assets, net of accumulated amortization of $14,567 and $15,143, respectively |
63,303 | 64,541 | ||||||
| Deferred tax asset |
443 | 2,393 | ||||||
| Other assets |
36,124 | 29,254 | ||||||
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| Total assets (including $52,097 and $41,054, respectively, related to consolidated variable interest entities) |
$ | 3,030,407 | $ | 2,955,751 | ||||
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| Liabilities |
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| Debt |
$ | 1,178,213 | $ | 1,295,048 | ||||
| Accounts payable and accrued expenses |
80,036 | 88,356 | ||||||
| Distributions payable |
16,270 | — | ||||||
| Other liabilities |
53,749 | 51,426 | ||||||
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| Total liabilities (including $35,309 and $27,679, respectively, related to consolidated variable interest entities) |
$ | 1,328,268 | $ | 1,434,830 | ||||
| Commitments and contingencies |
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| Stockholders’ Equity |
||||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized, 125 shares issued and outstanding as of March 31, 2015 and 0 shares authorized, issued or outstanding as of December 31, 2014 |
$ | — | $ | — | ||||
| Common stock, $0.01 par value, 500,000,000 shares authorized, 111,664,641 issued and outstanding as of March 31, 2015 and 100,000 shares authorized, 1,000 issued and outstanding as of December 31, 2014 |
1,117 | — | ||||||
| Additional paid in capital |
1,992,080 | 1,781,427 | ||||||
| Distributions in excess of retained earnings |
(295,297 | ) | (264,161 | ) | ||||
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| Total Company stockholders’ equity |
$ | 1,697,900 | $ | 1,517,266 | ||||
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| Non-controlling interests |
4,239 | 3,655 | ||||||
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| Total equity |
$ | 1,702,139 | $ | 1,520,921 | ||||
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| Total liabilities and equity |
$ | 3,030,407 | $ | 2,955,751 | ||||
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See accompanying notes to the combined condensed consolidated financial statements in the Company’s Form 10-Q
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Xenia Hotels & Resorts, Inc.
Combined Condensed Consolidated Statements of Operations
For the three months ended March 31, 2015 and 2014
($ amounts in thousands, except per share data, and unaudited)
| For the three months ended | ||||||||
| March 31, 2015 | March 31, 2014 | |||||||
| Revenues: |
||||||||
| Room revenues |
$ | 153,090 | $ | 146,482 | ||||
| Food and beverage revenues |
62,253 | 57,612 | ||||||
| Other revenues |
12,531 | 14,431 | ||||||
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| Total revenues |
$ | 227,874 | $ | 218,525 | ||||
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| Expenses: |
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| Room expenses |
35,187 | 33,144 | ||||||
| Food and beverage expenses |
40,187 | 39,117 | ||||||
| Other direct expenses |
4,265 | 8,158 | ||||||
| Other indirect expenses |
53,258 | 50,312 | ||||||
| Management and franchise fees |
11,451 | 12,306 | ||||||
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| Total hotel operating expenses |
144,348 | 143,037 | ||||||
| Depreciation and amortization |
36,387 | 33,884 | ||||||
| Real estate taxes, personal property taxes and insurance |
12,193 | 10,818 | ||||||
| Ground lease expense |
1,275 | 1,054 | ||||||
| General and administrative expenses |
7,045 | 5,459 | ||||||
| Business management fees |
— | 1,474 | ||||||
| Acquisition transaction costs |
29 | 1,120 | ||||||
| Provision for asset impairment |
— | 2,998 | ||||||
| Separation and other start-up related expenses |
25,296 | — | ||||||
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| Total expenses |
$ | 226,573 | $ | 199,844 | ||||
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| Operating income |
$ | 1,301 | $ | 18,681 | ||||
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| Other income |
2,582 | 125 | ||||||
| Interest expense |
(13,181 | ) | (14,448 | ) | ||||
| Equity in losses and gain on consolidation of unconsolidated entity, net |
— | 4,248 | ||||||
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| (Loss) income before income taxes |
$ | (9,298 | ) | $ | 8,606 | |||
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| Income tax expense |
(5,079 | ) | (1,919 | ) | ||||
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| Net (loss) income from continuing operations |
$ | (14,377 | ) | $ | 6,687 | |||
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| Net (loss) from discontinued operations |
(489 | ) | (4,368 | ) | ||||
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| Net (loss) income |
$ | (14,866 | ) | $ | 2,319 | |||
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| Net (loss) income per share available to common stockholders, basic and diluted |
$ | (0.13 | ) | $ | 0.02 | |||
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| Weighted average number of common shares basic and diluted |
112,964,557 | 113,397,997 | ||||||
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See accompanying notes to the combined condensed consolidated financial statements in the Company’s Form 10-Q
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Non-GAAP Financial Measures
The Company considers the following non-GAAP financial measures useful 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.
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Xenia Hotels & Resorts, Inc.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
For the three months ended March 31, 2015 and 2014
($ amounts in thousands, except per share data, and unaudited)
| For the three months ended March 31, |
||||||||
| 2015 | 2014 | |||||||
| Net (loss) income |
$ | (14,866 | ) | $ | 2,319 | |||
| Adjustments: |
||||||||
| Interest expense |
13,181 | 14,448 | ||||||
| Interest expense from unconsolidated entity |
— | 34 | ||||||
| Interest expense from discontinued operations |
— | 7,808 | ||||||
| Income tax expense |
5,079 | 1,919 | ||||||
| Depreciation and amortization related to investment properties |
36,387 | 33,884 | ||||||
| Depreciation and amortization related to investment in unconsolidated entity |
— | 102 | ||||||
| Depreciation and amortization of discontinued operations |
— | 12,602 | ||||||
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| EBITDA |
$ | 39,781 | $ | 73,116 | ||||
| Reconciliation to Adjusted EBITDA |
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| Impairment of investment properties |
— | 2,998 | ||||||
| Loss on extinguishment of debt |
105 | — | ||||||
| Gain on consolidation of investment in unconsolidated entity |
— | (4,481 | ) | |||||
| Acquisition and pursuit costs |
29 | 1,120 | ||||||
| Amortization of share-based compensation expense |
1,674 | — | ||||||
| Gain from excess property insurance recovery |
(276 | ) | — | |||||
| Business interruption proceeds net of hotel related expenses (1) |
(2,324 | ) | — | |||||
| EBITDA adjustment for three hotels sold in 2014 (2) |
(47 | ) | (555 | ) | ||||
| EBITDA adjustment for Suburban Select Service Portfolio (3) |
489 | (16,043 | ) | |||||
| Other non-recurring expenses (4) |
25,296 | — | ||||||
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| Adjusted EBITDA |
$ | 64,727 | $ | 56,155 | ||||
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| (1) | The business interruption insurance recovery for the three months ended March 31, 2015 was $3.7 million, which is net of hotel $1.4 million related expenses, attributable to the two hotels impacted by the August 2014 Napa Earthquake. |
| (2) | The following three hotels were disposed of in 2014: Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus. |
| (3) | On November 17, 2014, InvenTrust sold the Suburban Select Service Portfolio for an aggregate gross disposition price of $1.1 billion. Prior to the sale transaction, the Company oversaw the Suburban Select Service Portfolio. This sale reflected a strategic shift and had a major impact on our consolidated financial statements; therefore the operations of these 52 hotels are reflected as discontinued operations on the combined condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014. |
| (4) | For the three months ended March 31, 2015, other non-recurring expenses include one-time costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to the Tender Offer described in Note 10 in the combined condensed consolidated financial statements as of March 31, 2015 and 2014, and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company. |
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Xenia Hotels & Resorts, Inc.
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
For the three months ended March 31, 2015 and 2014
($ amounts in thousands, except per share data, and unaudited)
| For the three months ended March 31, |
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| 2015 | 2014 | |||||||
| Net (loss) income |
$ | (14,866 | ) | $ | 2,319 | |||
| Adjustments: |
||||||||
| Depreciation and amortization related to investment properties |
36,387 | 33,884 | ||||||
| Depreciation and amortization related to investment in unconsolidated entity |
— | 102 | ||||||
| Depreciation and amortization of discontinued operations |
— | 12,602 | ||||||
| Impairment of investment property |
— | 2,998 | ||||||
| Gain on consolidation of investment in unconsolidated entity |
$ | — | $ | (4,481 | ) | |||
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| FFO |
$ | 21,521 | $ | 47,424 | ||||
| Reconciliation to Adjusted FFO |
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| Loss on extinguishment of debt |
$ | 105 | $ | — | ||||
| Acquisition and pursuit costs |
29 | 1,120 | ||||||
| Loan related costs (1) |
1,169 | 1,150 | ||||||
| Amortization of share-based compensation expense |
1,674 | — | ||||||
| Income tax related to restructuring (2) |
2,875 | — | ||||||
| Business interruption proceeds net of hotel related expenses (3) |
(2,324 | ) | — | |||||
| Less FFO adjustment for three hotels sold in 2014 (4) |
(47 | ) | (407 | ) | ||||
| Less FFO adjustment for Suburban Select Service Portfolio (5) |
489 | (8,235 | ) | |||||
| Other non-recurring expenses (6) |
25,296 | — | ||||||
|
|
|
|
|
|||||
| Adjusted FFO |
$ | 50,787 | $ | 41,052 | ||||
|
|
|
|
|
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| (1) | Loan related costs included amortization of debt discounts, premiums and deferred loan origination costs. |
| (2) | For the three months ended March 31, 2015, the Company recognized income tax expense of $5.1 million, of which $2.9 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. |
| (3) | The business interruption insurance recovery for the three months ended March 31, 2015 was $3.7 million, which was net of $1.4 million hotel related expenses, attributable to the two hotels impacted by the August 2014 Napa Earthquake. |
| (4) | The following three hotels were disposed of in 2014: Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus. |
| (5) | On November 17, 2014, InvenTrust sold the Suburban Select Service Portfolio for an aggregate gross disposition price of $1.1 billion. Prior to the sale transaction, the Company oversaw the Suburban Select Service Portfolio. This sale reflected a strategic shift and had a major impact on our consolidated financial statements; therefore the operations of these 52 hotels are reflected as discontinued operations on the combined condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014. |
| (6) | For the three months ended March 31, 2015, other non-recurring expenses include one-time costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to the Tender Offer described in Note 10 in the combined condensed consolidated financial statements as of March 31, 2015 and 2014, and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company. |
11
Xenia Hotels & Resorts, Inc.
Debt Summary as of March 31, 2015
($ in thousands)
| Rate Type (a) | Rate | Fully Extended Maturity Date (b) |
Outstanding as of March 31, 2015 |
|||||||||||
| Mortgage Loans |
||||||||||||||
| Hilton Garden Inn Washington DC Downtown |
Fixed | 5.45 | % | October 2015 | $ | 55,500 | ||||||||
| Hilton Garden Inn Chicago North Shore/Evanston |
Fixed | 5.94 | % | June 2016 | 18,699 | |||||||||
| Grand Bohemian Hotel Orlando |
Fixed | 5.82 | % | October 2016 | 50,059 | |||||||||
| Marriott Woodlands Waterway Hotel & Convention Center |
Fixed | 4.50 | % | December 2016 | 73,695 | |||||||||
| Renaissance Atlanta Waverly Hotel & Convention Center |
Fixed | 5.50 | % | December 2016 | 97,000 | |||||||||
| Renaissance Austin Hotel |
Fixed | 5.51 | % | December 2016 | 83,000 | |||||||||
| Hyatt Regency Orange County |
Fixed | 5.25 | % | January 2017 | 62,693 | |||||||||
| Residence Inn Boston Cambridge |
Fixed | 5.50 | % | February 2017 | 30,591 | |||||||||
| Courtyard Pittsburgh Downtown |
Fixed | 4.00 | % | March 2017 | 23,097 | |||||||||
| Hampton Inn & Suites Denver Downtown |
Fixed | 5.25 | % | March 2017 | 13,552 | |||||||||
| Marriott Griffin Gate Resort & Spa |
Variable | 2.68 | % | March 2017 | 34,920 | |||||||||
| Marriott San Francisco Airport Waterfront |
Fixed | 5.40 | % | April 2017 | 53,449 | |||||||||
| Courtyard Birmingham Downtown at UAB |
Fixed | 5.25 | % | April 2017 | 13,577 | |||||||||
| Hilton University of Florida Conference Center Gainesville |
Fixed | 6.46 | % | February 2018 | 27,775 | |||||||||
| Residence Inn Denver City Center |
Variable | 2.43 | % | April 2018 | 45,210 | |||||||||
| Bohemian Hotel Savannah Riverfront |
Variable | 2.53 | % | December 2018 | 27,480 | |||||||||
| Fairmont Dallas |
Variable | 2.18 | % | April 2019 | 56,727 | |||||||||
| Andaz Savannah |
Variable | 2.18 | % | January 2020 | 21,500 | |||||||||
| Hotel Monaco Denver |
Variable | 2.28 | % | January 2020 | 41,000 | |||||||||
| Andaz Napa |
Variable | 2.28 | % | March 2020 | 30,500 | |||||||||
| Marriott Dallas City Center |
Variable | 2.43 | % | May 2020 | 40,090 | |||||||||
| Marriott Charleston Town Center |
Fixed | 3.85 | % | July 2020 | 17,108 | |||||||||
| Hyatt Regency Santa Clara |
Variable | 2.18 | % | September 2020 | 60,200 | |||||||||
| Grand Bohemian Charleston - Kessler JV(c) |
Variable | 2.68 | % | November 2020 | 14,203 | |||||||||
| Loews New Orleans Hotel |
Variable | 2.53 | % | November 2020 | 37,500 | |||||||||
|
Grand Bohemian Mountain Brook - Kessler JV(d) |
Variable | 2.68 | % | December 2020 | 14,477 | |||||||||
| Hotel Monaco Chicago |
Variable | 2.43 | % | January 2021 | 26,000 | |||||||||
| Westin Galleria & Oaks Houston |
Variable | 3.33 | % | May 2021 | 110,000 | |||||||||
|
|
|
|
|
|||||||||||
| Total Mortgage Loans |
4.01 | % (f) | $ | 1,179,602 | ||||||||||
| Mortgage Loan Premium / (Discounts)(e) |
(1,389 | ) | ||||||||||||
| Line of Credit |
— | |||||||||||||
|
|
|
|||||||||||||
| Total Debt |
$ | 1,178,213 | ||||||||||||
|
|
|
|||||||||||||
| (a) | Floating index is one month LIBOR. The Company does not have any hedging instruments in place. |
| (b) | 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. |
| (c) | The project construction loan has a total available balance of $20.0 million. |
| (d) | The project construction loan has a total available balance of $26.3 million. |
| (e) | Loan premiums/(discounts) on assumed mortgages recorded in purchase accounting. |
| (f) | Weighted average interest rate. |
12
Xenia Hotels & Resorts, Inc.
Same-Property(1) Hotel EBITDA and Hotel EBITDA Margin
($ in thousands and unaudited)
| For the three months ended March 31, |
||||||||||||
| 2015 | 2014 | Change | ||||||||||
| Revenues: |
||||||||||||
| Room revenues |
$ | 153,090 | $ | 149,125 | 2.7 | % | ||||||
| Food and beverage revenues |
62,253 | 56,951 | 9.3 | % | ||||||||
| Other revenues |
12,398 | 13,887 | (10.7 | %) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total revenues |
$ | 227,741 | $ | 219,963 | 3.5 | % | ||||||
| Expenses: |
||||||||||||
| Room expenses |
$ | 35,188 | $ | 33,938 | 3.7 | % | ||||||
| Food and beverage expenses |
40,185 | 38,479 | 4.4 | % | ||||||||
| Other direct expenses |
4,265 | 8,284 | (48.5 | %) | ||||||||
| Other indirect expenses |
53,301 | 50,040 | 6.5 | % | ||||||||
| Management and franchise fees |
11,452 | 12,197 | (6.1 | %) | ||||||||
| Real estate taxes, personal property taxes and insurance |
12,194 | 10,770 | 13.2 | % | ||||||||
| Ground lease expense |
1,275 | 1,222 | 4.3 | % | ||||||||
|
|
|
|
|
|
|
|||||||
| Total hotel operating expenses |
$ | 157,860 | $ | 154,930 | 1.9 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Hotel EBITDA |
$ | 69,881 | $ | 65,033 | 7.5 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Hotel EBITDA Margin |
30.7 | % | 29.6 | % | 112 | bps | ||||||
| (1) | “Same-Property” results include the results for all hotels owned as of March 31, 2015, except for the two hotels under development, include periods prior to the Company’s ownership of the Aston Waikiki Beach Resort, and exclude the results of operations of the Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus, all of which were disposed of in 2014. Results also include renovation and remediation disruption, and exclude the NOI guaranty payment at one hotel. |
13
Xenia Hotels & Resorts, Inc.
Same-Property(1) Hotel Statistical Data by Geography
(unaudited)
| As of March 31, 2015 | ||||||||
| Number of | Number of | |||||||
| Hotels | Rooms | |||||||
| Region |
||||||||
| South Atlantic |
||||||||
| (Incl. Georgia, Florida, Maryland, Virginia, West Virginia, and Washington, D.C.) |
15 | 3,269 | ||||||
| West South Central |
||||||||
| (Incl. Louisiana and Texas) |
9 | 3,339 | ||||||
| Pacific |
||||||||
| (Incl. California and Hawaii) |
7 | 3,062 | ||||||
| Mountain |
||||||||
| (Incl. Arizona, Colorado, and Utah) |
5 | 1,016 | ||||||
| Other |
||||||||
| (Incl. Alabama, Kentucky, Illinois, Iowa, Massachusetts, Missouri, and Pennsylvania) |
10 | 1,953 | ||||||
|
|
|
|
|
|||||
| Total |
46 | 12,639 | ||||||
| For the three months ended March 31, | ||||||||||||||||||||||||||||
| 2015 | 2014 | % Change | ||||||||||||||||||||||||||
| Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | RevPAR | ||||||||||||||||||||||
| Region |
||||||||||||||||||||||||||||
| South Atlantic |
77.4 | % | $ | 179.70 | $ | 139.17 | 77.4 | % | $ | 171.25 | $ | 132.47 | 5.1 | % | ||||||||||||||
| West South Central |
75.4 | % | $ | 194.69 | $ | 146.79 | 76.7 | % | $ | 186.83 | $ | 143.38 | 2.4 | % | ||||||||||||||
| Pacific |
71.4 | % | $ | 191.65 | $ | 136.77 | 79.4 | % | $ | 180.94 | $ | 143.70 | (4.8 | %) | ||||||||||||||
| Mountain |
80.7 | % | $ | 178.33 | $ | 143.95 | 80.9 | % | $ | 164.60 | $ | 133.19 | 8.1 | % | ||||||||||||||
| Other |
65.7 | % | $ | 148.77 | $ | 97.81 | 62.1 | % | $ | 140.34 | $ | 87.18 | 12.2 | % | ||||||||||||||
|
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|
|
|
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|
|
|
|||||||||||||||
| Total |
73.9 | % | $ | 182.16 | $ | 134.59 | 75.6 | % | $ | 173.39 | $ | 131.13 | 2.6 | % | ||||||||||||||
| (1) | “Same-Property” results include the results for all hotels owned as of March 31, 2015, except for the two hotels under development, include periods prior to the Company’s ownership of the Aston Waikiki Beach Resort, and exclude the results of operations of the Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus, all of which were disposed of in 2014. Results also include renovation and remediation disruption, and exclude the NOI guaranty payment at one hotel. |