Xenia Hotels & Resorts Seven-Kimpton Hotel Portfolio Deal in Trouble

Main Photo: The Hotel Monaco Chicago

Date: March 2020…updated June 2020

Locations: Santa Barbara, Chicago, Denver, Salt Lake City, Philadelphia, Alexandria, Virginia, and Portland, Oregon, all in the USA.

Names: Canary Hotel Santa Barbara, Hotel Monaco Chicago, Hotel Monaco Denver, Hotel Monaco Salt Lake City, Hotel Palomar Philadelphia, Lorien Hotel & Spa in Alexandria, Virginia, and RiverPlace Hotel in Portland, Oregon.

No. of Keys: 1,124

Seller: Xenia Hotels & Resorts announced in March 2020, that it had executed an agreement to sell a seven-hotel portfolio with a total of 1,124 guest rooms for $483 million, inclusive of $6 million of cash in existing FF&E reserve accounts.

In June 2020 Xenia has sued SBG, the Singaporean-based private company, in Delaware, claiming it owes US$20 million for backing out of the transaction amid the Covid-19 pandemic.

Buyer: Singapore based SBG US Holdings

The portfolio consists of seven Kimpton-managed hotels.

In March we reported, the agreed-upon sale price represented a 16.1x multiple and a 5.3% capitalisation rate (yield) on the hotels’ combined 2019 Hotel EBITDA and net operating income, respectively. The closing is subject to the satisfaction of certain customary closing conditions and is expected to occur by early May. The buyer can extend the closing date to early June with the payment of an additional deposit. In 2019, this seven-hotel portfolio contributed approximately $30 million to the Company’s Adjusted EBITDAre. For the seven months from June to December 2019, the portfolio contributed approximately $21 million to the Company’s Adjusted EBITDAre.

“We are pleased to have reached an agreement to sell this portfolio at attractive pricing, both generally and relative to our current trading multiple” said Marcel Verbaas, Chairman and Chief Executive Officer of Xenia. “If completed as anticipated, this sale will represent our largest transaction since our listing in early 2015. While these hotels are high-quality assets that are largely consistent with our long-term investment strategy, we believe that this disposition is an illustration of our ability to opportunistically unlock value within our current portfolio and increase shareholder value through portfolio recycling. The sale of these assets at an appealing valuation will further strengthen our balance sheet and position the Company to drive enhanced growth in the years ahead.”

Net debt to trailing twelve month Corporate EBITDA as of December 31, 2019, pro forma for the sale of this portfolio, is expected to be approximately 2.7x. Net proceeds to the Company are expected to be approximately $420 million, after repayment of a mortgage loan encumbering one of the hotels and transaction costs. The transaction does not require payment of any management agreement termination costs. Net proceeds from the sale will be utilised for general corporate purposes, which may include additional debt repayments, potential acquisitions consistent with the Company’s long-term strategy, and share repurchases under the Company’s existing authorisation.

Price: US$483m

Price per Key: US$429,715

THPT Comment: Xenia owns 39 hotels with 11,245 guestrooms across 16 states…and this looks like another notch in the belt of this terrible Covid-19 pandemic…. Confusion! in March 2020 the sale was due to be to a JV comprising King & Phillip Investments Pte Ltd, iProsperity Pty Ltd, and SoilBuild Group Holdings Ltd, according to Xenia’s Form 8-K filing with the SEC, reviewed by AnalyzeMarkets.  So not quite sure why the lawsuit is now with SBG?

First Seen: Hotel News Resource

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