Xenia Hotels Results

Xenia Hotels & Resorts Third Quarter Same-Property RevPAR Down 0.7%

Adjusted EBITDA declined $1.8 million to $72.9 million, a decrease of 2.4% compared to the third quarter of 2015.

Xenia Hotels

Xenia Hotels & Resorts, Inc. (NYSE:  XHR)  today announced results for the quarter ended September 30, 2016.  

Third Quarter 2016 Highlights

  • Net Income: Net income attributable to common stockholders was $20.2 million and net income per share was $0.19, increases of 11.9% and 18.8%, respectively, compared to the third quarter of 2015.

  • Same-Property RevPAR: Same-Property RevPAR decreased 0.7% compared to the third quarter of 2015 to $153.05, as occupancy declined 72 basis points while ADR increased 0.3%. Excluding the Company's Houston-area hotels, Same-Property RevPAR increased 2.3% compared to the third quarter of 2015, as occupancy increased 74 basis points and ADR increased 1.3%. 

  • Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 33.0%, an increase of 26 basis points compared to the third quarter of 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin increased 71 basis points compared to the third quarter of 2015.

  • Total Portfolio RevPAR: Total Portfolio RevPAR was 6.3% higher than in the third quarter of 2015, reflecting portfolio performance, as well as changes in portfolio composition. 

  • Adjusted EBITDA: Adjusted EBITDA declined $1.8 million to $72.9 million, a decrease of 2.4% compared to the third quarter of 2015.

  • Adjusted FFO per Diluted Share: Adjusted FFO available to common stockholders remained flat at $0.57 per diluted share compared to the third quarter of 2015.

  • Financing Activity: During the third quarter, the Company paid off one $97 million mortgage loan and executed a swap to fix the interest rate on each of two variable rate mortgage loans.

  • Dividends: The Company declared its third quarter dividend of $0.275 per share to common stock and unit holders of record on September 30, 2016.

"As anticipated, our third quarter operating results were a reflection of the challenging operating environment in the lodging industry in general and the Houston market in particular," said Marcel Verbaas, President and Chief Executive Officer of Xenia. "Despite these challenges, we were able to drive continued strong margin performance and improve our competitive positioning in our hotels' respective markets. These efforts resulted in a 33% Hotel EBITDA margin for our Same-Property portfolio. Excluding our assets in the Houston area, our Same-Property RevPAR increased 2.3%. While the current Houston lodging market is a difficult one, our expense focus continues to be successful and we look forward to the completion of our upcoming renovation of the Westin Galleria in the second quarter of 2017 as an additional driver for future growth for our extremely well-located hotels in the market."

Year to Date Results

  • Net Income: For the nine months ended September 30, 2016, net income attributable to common stockholders was $37.1 million, a 37.6% increase compared to the same period prior year.

  • Same-Property RevPAR: Same-Property RevPAR increased 0.6% compared to the nine months ended September 30, 2015, as occupancy declined 77 basis points while ADR increased 1.6%. Excluding the Company's Houston-area hotels, Same-Property RevPAR increased 3.0% compared to the nine months ended September 30, 2015, as occupancy increased 31 basis points and ADR increased 2.6%.

  • Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 33.2%, an increase of 26 basis points compared to the same period in 2015. Excluding the Company's Houston-area hotels, Same-Property Hotel EBITDA Margin grew 65 basis points during the nine months ended September 30, 2016 as compared to the same period in 2015.

  • Total Portfolio RevPAR: Total Portfolio RevPAR was 5.8% higher than in the nine months ended September 30, 2015, reflecting portfolio performance, as well as changes in portfolio composition. 

  • Adjusted EBITDA: Adjusted EBITDA increased 1.6% during the nine months ended September 30, 2016 as compared to the same period in 2015.

  • Adjusted FFO per Diluted Share: Adjusted FFO per diluted share was $1.65, a 3.8% increase compared to the same period in 2015.

"Notwithstanding the more difficult operating environment the industry is facing, we are pleased with the results of our expense controls and capital allocation efforts," Mr. Verbaas continued. "Year to date our Same-Property EBTIDA margin was up 26 basis points on 0.6% RevPAR growth.  Also, primarily as a result of our financing activities and share repurchases, we have been able to grow our Adjusted FFO per diluted share by 3.8% year to date over last year's results.  Additionally, our approximately 6% growth in Total Portfolio RevPAR through the first nine months of this year is indicative of the portfolio improvements we have been able to achieve since our listing in early 2015, including the sale of five hotels on the low end of our portfolio during the first half of the year."

Operating Results

The Company's results include the following:

 

 

Three Months Ended 

September 30,

Nine Months Ended 

September 30,

2016

2015

Change

2016

2015

Change

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

Net income attributable to common 

stockholders

$

20,242

$

18,094

11.9

%

$

37,096

$

26,963

37.6

%

Net income per share available to 

common stockholders

$

0.19

$

0.16

18.8

%

$

0.34

0.24

41.7

%

Same-Property Number of Hotels

43

43

43

43

Same-Property Number of Rooms

11,199

11,194

5

11,199

11,194

5

Same-Property Occupancy

78.6

%

79.3

%

(72 bps)

77.0

%

77.8

%

(77 bps)

Same-Property Average Daily Rate

$

194.73

$

194.25

0.3

%

$

197.39

$

194.22

1.6

%

Same-Property RevPAR

$

153.05

$

154.07

(0.7)

%

$

152.04

$

151.10

0.6

%

Same-Property Hotel EBITDA(1)

$

72,752

$

73,559

(1.1)

%

$

222,994

$

221,378

0.7

%

Same-Property Hotel EBITDA Margin(1)

33.0

%

32.8

%

26 bps

33.2

%

32.9

%

26 bps

Total Portfolio Number of Hotels(2)

46

50

(4)

46

50

(4)

Total Portfolio Number of Rooms(2)

11,594

13,104

(1,510)

11,594

13,104

(1,510)

Total Portfolio RevPAR(3)

$

156.63

$

147.31

6.3

%

$

152.49

$

144.11

5.8

%

Adjusted EBITDA(1)

$

72,897

$

74,701

(2.4)

%

$

223,427

$

219,820

1.6

%

Adjusted FFO(1)

$

61,758

$

63,356

(2.5)

%

$

179,079

$

178,120

0.5

%

Adjusted FFO per diluted share(1)

$

0.57

$

0.57

%

$

1.65

$

1.59

3.8

%

 

(1)

See tables later in this press release for reconciliations from net income to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA, Funds From Operations ("FFO"), Adjusted FFO, and Same-Property Hotel EBITDA.  EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, Adjusted FFO per diluted share, Same-Property Hotel EBITDA, and Same-Property Hotel EBITDA Margin are non-GAAP financial measures.

(2)

As of end of periods presented.

(3)

Results of all hotels as owned during the periods presented, including the results of hotels sold or acquired for the actual period of ownership by the Company.

"Same-Property" results include the results for all hotels owned as of September 30, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015.  "Same-Property" results include periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia, and exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation disruption for multiple capital projects during the periods presented.

Financings and Balance Sheet

In August, the Company executed a swap to fix the interest rate on the loan collateralized by the Hotel Monaco Denver at 2.98% for the duration of the loan.  Additionally in August, the Company executed a swap to fix the interest rate on the loan collateralized by the Andaz Napa at 2.99% for the duration of the loan.

In September 2016, the Company paid off the $97 million mortgage loan collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center with cash available on its balance sheet.

As of September 30, 2016, the Company had total outstanding debt of $1.2 billion with a weighted average interest rate of 3.39%.  In addition, the Company had $185 million of cash and cash equivalents and full availability on its $400 million senior unsecured credit facility.  Total net debt to trailing 12 month Corporate EBITDA (as defined in Section 1.01 of the Company's senior unsecured credit facility) was 3.5x.

Subsequent to quarter end, in October 2016, the Company paid off three mortgage loans, including the $13 million loan collateralized by the Courtyard Birmingham Downtown at UAB, the $83 million loan collateralized by the Renaissance Austin, and the $34 million loan collateralized by the Marriott Griffin Gate Resort & Spa.  The Company has proactively addressed all of its 2016 and 2017 debt maturities.

Additionally in October, the Company modified the loans collateralized by the Marriott Dallas City Center and the Hyatt Regency Santa Clara.  The amendments resulted in $11 million and $30 million of additional proceeds, respectively, and extended the maturity dates to January 2022.

"We are pleased with our financing activities to date, as we have addressed all of our maturities through early 2018 and lowered our weighted average interest rate by over 30 basis points since the first quarter.   We continue to maintain a strong, conservative debt profile in terms of rate, maturity, liquidity and overall leverage level.  We remain focused on balance sheet optimization and strive to maintain flexibility enabling us to continue to execute on our capital allocation strategy going forward," stated Atish Shah, Chief Financial Officer for Xenia.

Capital Expenditures

During the third quarter, the Company invested $16 million in its portfolio. The Company completed several smaller renovation projects during the quarter and continued its renovation of the meeting rooms and ballrooms at the Renaissance Atlanta Waverly Hotel & Convention Center.  The large majority of the guestroom renovation at the Hyatt Key West Resort & Spa was completed during the quarter and the property was rebranded as the Hyatt Centric Key West Resort & Spa in early November after the completion of the renovation.

"We are excited to have completed the significant upgrade of the former Hyatt Key West Resort & Spa and the inclusion of the asset in Hyatt's new portfolio of lifestyle hotels, Hyatt Centric.  In 2016, we completed a guestroom renovation, redesigned and renovated the Blue Mojito Pool Bar and Grill, and relocated and significantly enhanced the Jala Spa, allowing us to add two additional guestrooms to our highest RevPAR hotel.   We believe these upgrades coupled with the Hyatt Centric brand philosophy will provide continued growth at one of our top lifestyle hotels and the island's premier boutique offering," commented Mr. Verbaas.

For the nine months ended September 30, 2016, the Company invested over $36 million in its portfolio. Several capital projects will commence during the fourth quarter, including guestroom renovations at the Andaz San Diego, Westin Galleria Houston, Bohemian Hotel Celebration, and Bohemian Hotel Savannah Riverfront.

Share Repurchase

In December 2015, the Company's Board of Directors authorized a $100 million share repurchase program.  During the third quarter, the Company purchased 337,113 shares under its existing share repurchase authorization for an aggregate purchase price of $5.5 million.  During the nine months ended September 30, 2016, the Company purchased 4,466,048 shares for an aggregate purchase price of $66.3 million. 

Subsequent to quarter end and as of November 4, 2016, the Company repurchased an additional 402,715 shares for an aggregate purchase price of $6.2 million.  A total of 4,868,763 shares have been repurchased, at a weighted average price of $14.88 per share, for total consideration of approximately $72.5 million as of November 4, 2016.

In November 2016, the Company's Board of Directors authorized the repurchase of up to an additional $75 million of the Company's outstanding common shares.  Repurchases may be made in open market and privately-negotiated transactions, or by other means, including Rule 10b5-1 trading plans.  The repurchase program may be suspended or discontinued at any time, and does not obligate the Company to acquire any particular amount of shares.  Inclusive of this additional authorization, the Company had approximately $102.5 million remaining under its total repurchase authorization as of November 4, 2016.

2016 Outlook and Guidance

The Company's outlook for 2016 is based on the current economic environment, incorporates all expected renovation disruption, and assumes no further acquisitions, dispositions, or share repurchases.  Same-Property RevPAR change excludes the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, as both properties commenced operations in the second half of 2015, and the Hotel Commonwealth, as the property underwent a significant expansion project in late 2015, as well as the five hotels sold in 2016.  The change to the Company's anticipated Adjusted EBITDA from previously provided guidance is attributable to changes in the Company's forecast for the remainder of the year offset by a slight reduction in anticipated general & administrative expenses.  The change in Adjusted FFO is due to similar factors, as well as a $1 million reduction in expected interest expense and a $0.5 millionreduction in expected income tax expense.

 

Current 2016 Guidance

Variance to Prior Guidance

Low End

High End

Low End

High End

($ amounts in millions, except per share data)

Net Income

$45

$52

$(8)

$(9)

Same-Property RevPAR Change

(1.0)%

—%

(1.0)%

(1.0)%

Adjusted EBITDA

$282

$288

$(6)

$(8)

Adjusted FFO

$231

$237

$(5)

$(7)

Adjusted FFO per Diluted Share

$2.14

$2.19

$(0.03)

$(0.06)

Capital Expenditures

$58

$62

$1

$(2)

Guidance assumptions include:

  • Average RevPAR declines of 16% to 18% at the Company's Houston-area hotels, primarily due to the impact of continued weakness in the energy market and new supply. Excluding the Company's Houston-area hotels, Same-Property RevPAR is expected to increase 1.0% to 2.0% as compared to 2015. 

  • General and administrative expense of approximately $21 million, excluding management transition and severance costs and non-cash share-based compensation. 

  • Interest expense of approximately $45 million, excluding non-cash loan related costs. 

  • Income tax expense of $5 million to $6 million.

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 46 hotels, including 44 wholly owned hotels, comprising 11,594 rooms, across 20 states and the District of Columbia. Xenia's hotels are primarily operated 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.  

Xenia Hotels & Resorts, Inc.

Condensed Consolidated Balance Sheets

As of September 30, 2016 and December 31, 2015 

($ amounts in thousands, except per share data) 

September 30, 2016

December 31, 2015

Assets

(Unaudited)

Investment properties:

Land

$

343,000

$

343,000

Building and other improvements

2,830,089

2,680,591

Construction in progress

169

Total

$

3,173,089

$

3,023,760

Less: accumulated depreciation

(630,282)

(518,961)

Net investment properties

$

2,542,807

$

2,504,799

Cash and cash equivalents

185,311

122,154

Restricted cash and escrows

85,582

73,021

Accounts and rents receivable, net of allowance of $259 and $243, respectively

33,587

23,529

Intangible assets, net of accumulated amortization of $19,259 and $16,660, 

respectively

77,346

58,059

Deferred tax asset

1,726

2,304

Other assets

20,449

40,683

Assets held for sale

181,396

Total assets (including $76,760 and $77,140, respectively, related to 

consolidated variable interest entities)

$

2,946,808

$

3,005,945

Liabilities

Debt, net of loan discounts, premiums and unamortized deferred financing costs

$

1,169,128

$

1,094,536

Accounts payable and accrued expenses

81,696

83,211

Distributions payable

30,121

25,684

Other liabilities

42,986

27,510

Liabilities associated with assets held for sale

31,646

Total liabilities (including $48,409 and $48,582, respectively, related to 

consolidated variable interest entities)

$

1,323,931

$

1,262,587

Commitments and contingencies

Stockholders' equity

Common stock, $0.01 par value, 500,000,000 shares authorized, 107,295,503 and 

111,671,372 shares issued and outstanding as of September 30, 2016 and 

December 31, 2015, respectively

1,073

1,117

Additional paid in capital

1,932,360

1,993,760

Accumulated other comprehensive (loss) income

(9,721)

1,543

Distributions in excess of retained earnings

(321,292)

(268,991)

Total Company stockholders' equity

$

1,602,420

$

1,727,429

Non-controlling interests

20,457

15,929

Total equity

$

1,622,877

$

1,743,358

Total liabilities and equity

$

2,946,808

$

3,005,945

 

Xenia Hotels & Resorts, Inc.

Combined Condensed Consolidated Statements of Operations and Comprehensive Income

For the Three and Nine Months Ended September 30, 2016 and 2015

(Unaudited)

 ($ amounts in thousands, except per share data)

Three Months Ended 

September 30,

Nine Months Ended 

September 30,

2016

2015

2016

2015

Revenues:

     Rooms revenues

$

167,066

$

175,872

$

507,361

$

501,754

     Food and beverage revenues

55,687

58,500

185,484

185,707

     Other revenues

11,193

14,081

37,515

40,089

Total revenues

$

233,946

$

248,453

$

730,360

$

727,550

Expenses:

     Rooms expenses

36,854

38,841

111,812

111,378

     Food and beverage expenses

38,233

41,308

122,475

122,806

     Other direct expenses

1,520

4,625

9,571

13,256

     Other indirect expenses

55,076

58,311

170,957

167,758

     Management and franchise fees

11,459

12,605

37,486

37,674

Total hotel operating expenses

$

143,142

$

155,690

$

452,301

$

452,872

     Depreciation and amortization

37,796

37,818

115,066

110,094

     Real estate taxes, personal property taxes and insurance

12,300

12,985

34,875

36,984

     Ground lease expense

1,356

1,272

4,112

3,869

     General and administrative expenses

7,211

5,396

25,508

19,443

     Acquisition transaction costs

2

4,510

147

5,396

     Pre-opening expenses

825

825

     Provision for asset impairment

15

10,006

     Separation and other start-up related expenses

426

26,887

Total expenses

$

201,822

$

218,922

$

642,015

$

656,370

Operating income

$

32,124

$

29,531

$

88,345

$

71,180

     Gain (loss) on sale of investment properties

(1)

792

     Other income

738

672

916

3,389

     Interest expense

(12,373)

(12,496)

(38,014)

(38,726)

     Loss on extinguishment of debt

(244)

(5,023)

(283)

     Net income before income taxes

$

20,244

$

17,707

$

47,016

$

35,560

     Income tax (expense) benefit

187

140

(9,613)

(8,344)

Net income from continuing operations

$

20,431

$

17,847

$

37,403

$

27,216

Net loss from discontinued operations

(489)

Net income

$

20,431

$

17,847

$

37,403

$

26,727

     Non-controlling interests in consolidated real estate entities

84

255

205

255

     Non-controlling interests of common units in Operating 

     Partnership

(273)

(4)

(512)

(7)

Net (income) loss attributable to non-controlling interests

$

(189)

$

251

$

(307)

$

248

Net income attributable to the Company

$

20,242

$

18,098

$

37,096

$

26,975

     Distributions to preferred stockholders

(4)

(12)

Net income attributable to common stockholders

$

20,242

$

18,094

$

37,096

$

26,963

 

Xenia Hotels & Resorts, Inc.

Combined Condensed Consolidated Statements of Operations and Comprehensive Income - Continued

For the Three and Nine Months Ended September 30, 2016 and 2015 

(Unaudited)

 ($ amounts in thousands, except per share data)

Three Months Ended 

September 30,

Nine Months Ended 

September 30,

2016

2015

2016

2015

Basic and diluted earnings per share

Income from continuing operations available to common 

stockholders

$

0.19

$

0.16

$

0.34

$

0.24

Income from discontinued operations available to common 

stockholders

Net income per share available to common stockholders

$

0.19

$

0.16

$

0.34

$

0.24

Weighted average number of common shares (basic)

107,538,601

111,694,773

108,384,241

112,096,957

Weighted average number of common shares (diluted)

107,677,749

111,885,350

108,495,365

112,258,505

Comprehensive Income:

Net income

$

20,431

$

17,847

$

37,403

$

26,727

Other comprehensive income:

     Unrealized gain (loss) on interest rate derivative instruments

1,362

(14,283)

     Reclassification adjustment for amounts recognized in net 

     income (interest expense)

972

2,869

$

22,765

$

17,847

$

25,989

$

26,727

Comprehensive income attributable to non-controlling interests:

     Non-controlling interests in consolidated real estate entities

84

255

205

255

     Non-controlling interests of common units in Operating Partnership

(303)

(4)

(362)

(7)

Comprehensive income attributable to non-controlling interests

$

(219)

$

251

$

(157)

$

248

Comprehensive income attributable to the Company

$

22,546

$

18,098

$

25,832

$

26,975

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.

Same-Property Hotel EBITDA and Same-Property Hotel EBITDA Margin

"Same-Property" results include the results for all hotels owned as of September 30, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015.  "Same-Property" results include periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel and Hotel Palomar Philadelphia, and exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation disruption for multiple capital projects during the periods presented.

The Company calculates Hotel EBITDA in accordance with 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.

 

 

Xenia Hotels & Resorts, Inc.

Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Same-Property Hotel EBITDA

For the Three and Nine Months Ended September 30, 2016 and 2015

($ amounts in thousands)

Three Months Ended 

September 30,

Nine Months Ended 

September 30,

2016

2015

2016

2015

Net income

$

20,431

$

17,847

$

37,403

$

26,727

Adjustments:

Interest expense

12,373

12,496

38,014

38,726

Income tax expense

(187)

(140)

9,613

8,344

Depreciation and amortization related to investment properties

37,723

37,818

114,993

110,094

Non-controlling interests in consolidated real estate entities

84

255

205

255

Adjustments related to non-controlling interests in consolidated 

real estate entities

(316)

(39)

(941)

(39)

EBITDA attributable to common stock and unit holders

$

70,108

$

68,237

$

199,287

$

184,107

Reconciliation to Adjusted EBITDA and Hotel EBITDA

   Impairment of investment properties

15

10,006

   Loss (gain) on sale of investment property

1

(792)

   Loss on extinguishment of debt

244

5,023

283

   Acquisition transaction costs

2

4,510

147

5,396

   Amortization of share-based compensation expense

2,045

1,326

7,049

4,774

   Amortization of above and below market ground leases

156

72

491

285

   Pre-opening expenses

825

825

   Adjustments related to non-controlling interests pre-opening 

   expense

(206)

(206)

   Management termination fees net of guaranty income(1)

212

212

   Gain from excess property insurance recovery

(322)

(598)

   Business interruption insurance recoveries, net(2)

(379)

(2,549)

   EBITDA adjustment for hotels sold prior to spin-off

404

   Management transition and severance expenses

101

1,991

   Other non-recurring expenses(3)

426

26,887

   Other adjustments

225

225

Adjusted EBITDA attributable to common stock and unit 

holders

$

72,897

$

74,701

$

223,427

$

219,820

   Corporate expenses

5,011

3,112

16,882

13,902

   Income from sold properties

33

(5,653)

(5,927)

(21,236)

   Pro forma hotel level adjustments, net(4)

(4,642)

1,399

(10,840)

8,892

  Other reimbursements

(547)

(548)

Same-Property Hotel EBITDA attributable to common stock 

and unit holders

$

72,752

$

73,559

$

222,994

$

221,378

 

(1)

For the three and nine months ended 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.

(2)

The business interruption insurance proceeds received during the three and nine months ended September 30, 2015 was $0.4 million and $2.5 million, which is net of $0.1 million and $1.6 million of hotel related expenses attributable to those hotels impacted by the August 2014 Napa Earthquake.

(3)

For the three and nine months ended September 30, 2015, other non-recurring expenses include non-recurring costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to a tender offer and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company.  

(4)

Pro forma to include the results of operations of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia for periods prior to Company ownership, and to exclude the results of operations of the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015, for the three and nine months ended September 30, 2016.

 

 

Xenia Hotels & Resorts, Inc.

Reconciliation of Net Income to FFO and Adjusted FFO

For the Three and Nine Months Ended September 30, 2016 and 2015

($ amounts in thousands)

Three Months Ended 

September 30,

Nine Months Ended 

September 30,

2016

2015

2016

2015

Net income

$

20,431

$

17,847

$

37,403

$

26,727

Adjustments:

Depreciation and amortization related to investment 

properties

37,723

37,818

114,993

110,094

Impairment of investment property

15

10,006

Loss (gain) on sale of investment property

1

(792)

Non-controlling interests in consolidated real estate entities

84

255

205

255

Adjustments related to non-controlling interests in 

consolidated real estate entities

(224)

(27)

(672)

(27)

FFO attributable to the Company

$

58,030

$

55,893

$

161,143

$

137,049

  Distribution to preferred shareholders

(4)

(12)

FFO attributable to common stock and unit holders

$

58,030

$

55,889

$

161,143

$

137,037

Reconciliation to Adjusted FFO

  Loss on extinguishment of debt

244

5,023

283

  Acquisition transaction costs

2

4,510

147

5,396

  Loan related costs(1)

959

681

3,021

2,872

  Adjustment related to non-controlling interests loan related costs

(4)

(11)

  Amortization of share-based compensation expense

2,045

1,326

7,049

4,774

  Amortization of above and below market ground leases

156

72

491

285

  Pre-opening expenses

825

825

  Adjustments related to non-controlling interests pre-opening 

  expense

(206)

(206)

  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)

  FFO adjustment for hotels sold prior to spin-off

404

  Management transition and severance expenses

101

1,991

  Other non-recurring expenses (5)

426

26,887

  Other adjustments

225

225

Adjusted FFO attributable to common stock and unit 

holders

$

61,758

$

63,356

$

179,079

$

178,120

 

(1)

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

(2)

For the three and nine months ended 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 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 proceeds received during the three and nine months ended September 30, 2015 was $0.4 million and $2.5 million, respectively, which was net of $0.1 million and $1.6 million of hotel related expenses attributable to those hotels impacted by the August 2014 Napa Earthquake.

(5)

For the three and nine months ended September 30, 2015, other non-recurring expenses include non-recurring costs related to the listing of our common stock on the NYSE, such as legal, audit fees and other professional fees, costs related to a tender offer and other start-up costs incurred while transitioning to a stand-alone, publicly-traded company.  

 

 

Xenia Hotels & Resorts, Inc.

Reconciliation of Net Income to Adjusted EBITDA

for Current Full Year 2016 Guidance

($ amounts in millions)

 

 

 

 

Guidance 

Midpoint

Net income attributable to the Company

$

48

Adjustments:

Depreciation and amortization related to investment properties

155

Interest expense

49

Income tax expense

6

Adjustments related to non-controlling interests

1

EBITDA attributable to common stock and unit holders

$

259

Gain on sale and impairment of investment property

9

Amortization of share-based compensation expense

9

Loss on extinguishment of debt

5

Other(1)

3

Adjusted EBITDA attributable to common stock and unit holders

$

285

 

(1)

Includes management transition and severance expenses, amortization of above and below market ground leases, and acquisition and pursuit costs.

 

 

Reconciliation of Net Income to Adjusted FFO

for Current Full Year 2016 Guidance

($ amounts in millions)

Guidance 

Midpoint

Net income attributable to the Company

$

48

Adjustments:

Depreciation and amortization related to investment properties

155

Gain on sale and impairment of investment property

9

Adjustments related to non-controlling interests

1

FFO attributable to common stock and unit holders

$

213

Amortization of share-based compensation expense

9

Loss on extinguishment of debt

5

Other(2)

7

Adjusted FFO attributable to common stock and unit holders

$

234

 

(2)

Includes loan related costs, management transition and severance expenses, amortization of above and below market ground leases, and acquisition and pursuit costs.

 

 

Xenia Hotels & Resorts, Inc.

Debt Summary

($ amounts in thousands)

Rate Type

Rate(1)

Fully Extended 

Maturity Date(2)

Outstanding as of

September 30, 

2016

Pro Forma as of 

November 7, 

2016

     Renaissance Austin Hotel

 Fixed

5.51%

December 2016

83,000

     Marriott Griffin Gate Resort & Spa

 Variable

3.02%

March 2017

33,806

     Courtyard Birmingham Downtown at UAB

 Fixed

5.25%

April 2017

13,119

     Residence Inn Denver City Center

 Variable

2.78%

April 2018

45,210

45,210

     Bohemian Hotel Savannah Riverfront

 Variable

2.88%

December 2018

27,480

27,480

     Fairmont Dallas

 Variable

2.52%

April 2019

55,682

55,682

     Andaz Savannah

 Variable

2.52%

January 2020

21,500

21,500

     Hotel Monaco Denver

Fixed(3)

2.98%

January 2020

41,000

41,000

     Andaz Napa

Fixed(3)

2.99%

March 2020

38,000

38,000

     Marriott Dallas City Center(4)

 Variable

2.78%

May 2020

40,090

51,000

     Marriott Charleston Town Center

 Fixed

3.85%

July 2020

16,524

16,524

     Hyatt Regency Santa Clara(4)

 Variable

2.53%

September 2020

60,200

90,000

     Grand Bohemian Hotel Charleston (JV)

 Variable

3.02%

November 2020

19,785

19,785

     Loews New Orleans Hotel

 Variable

2.87%

November 2020

37,500

37,500

     Grand Bohemian Hotel Mountain Brook (JV)

 Variable

3.03%

December 2020

26,076

26,076

     Hotel Monaco Chicago

 Variable

2.78%

January 2021

24,144

24,144

     Westin Galleria & Oaks Houston

 Variable

3.03%

May 2021

110,000

110,000

     Hotel Palomar Philadelphia

Fixed(3)

4.14%

January 2023

60,000

60,000

     Residence Inn Boston Cambridge

 Fixed

4.48%

November 2025

63,000

63,000

     Grand Bohemian Hotel Orlando

 Fixed

4.53%

March 2026

60,000

60,000

     Total Mortgage Loans

3.47%

(5)

$

876,116

$

786,901

     Mortgage Loan Discounts(6)

(73)

     Unamortized Deferred Financing Costs

(6,915)

(6,824)

Senior Unsecured Credit Facility

 Variable

2.23%

February 2020

10,000

Term Loan $175M

Fixed(7)

2.79%

February 2021

175,000

175,000

Term Loan $125M

Fixed(7)

3.63%

October 2022

125,000

125,000

Total Debt

3.39%

(5)

$

1,169,128

$

1,090,077

 

(1)

Variable index is one month LIBOR. 

(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 an extension fee. 

(3)

A variable interest loan for which the interest rate has been fixed for the entire term.

(4)

In October 2016, the Company modified the loan which extended the maturity date to January 2022.

(5)

Weighted average interest rate as of September 30, 2016. 

(6)

Loan discounts on assumed mortgages recorded in purchase accounting.

(7)

A variable interest loan for which LIBOR has been fixed for the entire term.  The spread to LIBOR may vary, as it is determined by the Company's leverage ratio.

 

Xenia Hotels & Resorts, Inc.

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

For the Three and Nine Months Ended September 30, 2016 and 2015

($ amounts in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2016

2015

Change

2016

2015

Change

Revenues:

Room revenues

$

157,689

$

158,665

(0.6)

%

$

466,504

$

461,689

1.0

%

Food and beverage revenues

52,054

52,829

(1.5)

%

170,294

172,734

(1.4)

%

Other revenues

10,616

13,076

(18.8)

%

35,082

37,945

(7.5)

%

Total revenues

$

220,359

$

224,570

(1.9)

%

$

671,880

$

672,368

(0.1)

%

Expenses:

Room expenses

$

34,453

$

34,336

0.3

%

$

101,501

$

101,086

0.4

%

Food and beverage expenses

35,898

36,624

(2.0)

%

112,329

112,929

(0.5)

%

Other direct expenses

1,357

4,298

(68.4)

%

8,677

12,556

(30.9)

%

Other indirect expenses

51,851

51,276

1.1

%

154,980

152,187

1.8

%

Management and franchise fees

11,087

11,580

(4.3)

%

35,465

34,959

1.4

%

Real estate taxes, personal property taxes 

and insurance

11,760

11,715

0.4

%

32,331

33,745

(4.2)

%

Ground lease expense

1,201

1,182

1.6

%

3,603

3,528

2.1

%

Total hotel operating expenses

$

147,607

$

151,011

(2.3)

%

$

448,886

$

450,990

(0.5)

%

Hotel EBITDA

$

72,752

$

73,559

(1.1)

%

$

222,994

$

221,378

0.7

%

Hotel EBITDA margin

33.0

%

32.8

%

26 bps

33.2

%

32.9

%

26 bps

 

(1)

"Same-Property" results include the results for all hotels owned as of September 30, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015.  "Same-Property" results include periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia, and exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation disruption for multiple capital projects during the periods presented.

 

Xenia Hotels & Resorts, Inc.

Total Hotel Data by Geography(1)

As of September 30, 2016

September 30, 2016

Region

Number of 

Hotels

Number of 

Rooms

South Atlantic

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

12

2,343

West South Central

(Louisiana, Texas)

9

3,339

Pacific

(California, Hawaii, Oregon)

8

2,594

Mountain

(Colorado, Utah)

4

790

Other

(Alabama, Illinois, Iowa, Kentucky, Massachusetts, Missouri, Pennsylvania)

13

2,528

Total

46

11,594

 

(1)

All hotels owned as of September 30, 2016, including the Grand Bohemian Hotel Charleston, the Grand Bohemian Hotel Mountain Brook and the Hotel Commonwealth, which are not included in "Same-Property" data.

 

Xenia Hotels & Resorts, Inc.

Same-Property(1) Statistical Data by Geography

For the Three and Nine Months Ended September 30, 2016 and 2015

Three Months Ended

Three Months Ended

September 30, 2016

September 30, 2015

% Change

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

RevPAR

Region

South Atlantic

81.8

%

$

176.93

$

144.74

80.4

%

$

178.65

$

143.69

0.7

%

West South Central

64.6

%

$

164.80

$

106.52

67.3

%

$

175.21

$

117.87

(9.6)

%

Pacific

88.5

%

$

241.08

$

213.30

88.9

%

$

234.63

$

208.65

2.2

%

Mountain

87.7

%

$

197.23

$

172.91

86.3

%

$

194.70

$

168.01

2.9

%

Other

81.5

%

$

189.07

$

154.16

82.6

%

$

182.14

$

150.49

2.4

%

Total

78.6

%

$

194.73

$

153.05

79.3

%

$

194.25

$

154.07

(0.7)

%

Nine Months Ended

Nine Months Ended

September 30, 2016

September 30, 2015

% Change

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

RevPAR

Region

South Atlantic

80.7

%

$

193.53

$

156.11

79.8

%

$

192.36

$

153.55

1.7

%

West South Central

69.0

%

$

182.79

$

126.04

72.4

%

$

187.06

$

135.42

(6.9)

%

Pacific

83.3

%

$

231.97

$

193.33

81.5

%

$

220.63

$

179.87

7.5

%

Mountain

82.4

%

$

186.47

$

153.68

84.5

%

$

183.12

$

154.66

(0.6)

%

Other

76.1

%

$

181.18

$

137.90

77.1

%

$

177.79

$

137.07

0.6

%

Total

77.0

%

$

197.39

$

152.04

77.8

%

$

194.22

$

151.10

0.6

%

 

(1)

"Same-Property" results include the results for all hotels owned as of September 30, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015.  "Same-Property" results include periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia.  Results include renovation disruption for multiple capital projects during the periods presented.

 

Xenia Hotels & Resorts, Inc.

Same-Property(1) Historical Operating Data

($ amounts in thousands, except ADR and RevPAR)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

2015

2015

2015

2015

2015

Occupancy

74.0

%

80.1

%

79.3

%

72.6

%

76.5

%

ADR

$

188.62

$

199.30

$

194.25

$

195.63

$

194.56

RevPAR

$

139.51

$

159.55

$

154.07

$

142.01

$

148.81

Hotel Revenues

$

210,503

$

237,295

$

224,570

$

224,378

$

896,746

Hotel EBITDA

$

64,475

$

83,342

$

73,559

$

71,974

$

293,350

Hotel EBITDA Margin

30.6

%

35.1

%

32.8

%

32.1

%

32.7

%

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

2016

2016

2016

2016

2016

Occupancy

72.4

%

80.0

%

78.6

%

ADR

$

194.13

$

202.96

$

194.73

RevPAR

$

140.60

$

162.47

$

153.05

Hotel Revenues

$

212,187

$

239,334

$

220,359

Hotel EBITDA

$

63,443

$

86,799

$

72,752

Hotel EBITDA Margin

29.9

%

36.3

%

33.0

%

 

(1)

"Same-Property" results include the results for all hotels owned as of September 30, 2016, except for the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook, which commenced operations in the second half of 2015, and the Hotel Commonwealth, which underwent a significant expansion project in late 2015.  "Same-Property" results include periods prior to the Company's ownership of the Canary Santa Barbara, RiverPlace Hotel, and Hotel Palomar Philadelphia, and exclude the NOI guaranty payment at the Andaz San Diego.  Results include renovation disruption for multiple capital projects during the periods presented.



Logos, product and company names mentioned are the property of their respective owners.