Xenia Hotels & Resorts Reports Second Quarter 2015 Results

ORLANDO, Fla., Aug. 13, 2015 /PRNewswire/ -- Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced results for the second quarter ended June 30, 2015. The Company's results include the following:

"Same-Property" results include the results for all hotels owned as of June 30, 2015, except for the two hotels under development, include periods prior to the Company's ownership of the Aston Waikiki Beach Resort, and excludes the results of operations of the Crowne Plaza Charleston, Doubletree Suites Atlanta Galleria, and Holiday Inn Secaucus, all of which we disposed of in 2014. Results also include renovation and remediation disruption, and excludes the NOI guaranty payment at the Andaz San Diego.

The Company's financial statements prior to February 3, 2015 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.

Second Quarter 2015 Highlights

• Same-Property RevPAR: Same-Property RevPAR, as adjusted by our operators for USALI, increased 4.7% from the second quarter of 2014 to $150.19, driven by a 5.2% ADR increase slightly offset by a 0.5% decrease in occupancy. Unadjusted Same-Property RevPAR increased 3.9%. The Company estimates that RevPAR growth was negatively impacted by approximately 60 bps year-over-year due to the renovation disruption at the Marriott San Francisco Airport Waterfront.
• Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA margin was 34.1%, an increase of 70 basis points from the same period in 2014.
• Adjusted EBITDA: Adjusted EBITDA grew $7.7 million to $80.2 million, an increase of 10.6% over the second quarter of 2014.
• Adjusted FFO: Adjusted FFO available to common stockholders increased to $0.57 per diluted share compared to $0.50 per diluted share for the second quarter of 2014, representing an increase of 14.0%.
• Dividends: The Company declared its second quarter dividend of $0.23 per share on June 4, 2015. The dividend was paid on July 15, 2015.

"We are pleased with our second quarter results as we were able to significantly increase our Adjusted EBITDA and Adjusted FFO," said Marcel Verbaas, President and Chief Executive Officer of Xenia. "The fact that our adjusted same-property ADR and RevPAR increased by 5.2% and 4.7%, respectively, despite headwinds in the Houston market and the disruption from our Marriott San Francisco Airport Waterfront renovation, is reflective of the overall strength of our portfolio. Lodging market fundamentals remain strong and we are anticipating continued positive results for the remainder of the year."

Year to Date Results

For the six months ended June 30, 2015, Same-Property RevPAR as provided by our operators adjusted for USALI increased 4.2% from the first half of 2014 to $142.44 with ADR growth of 5.5% offset by a slight decline in occupancy of 1.3%. Unadjusted Same-Property RevPAR increased 3.3%. The Company's Same-Property Hotel EBITDA Margin was 32.5%, which improved 90 basis points compared to the same period in prior year. The Company's Adjusted EBITDA and Adjusted FFO per diluted share increased 12.6% and 17.2%, respectively, during the first half of 2015 as compared to the same period in 2014. The Company estimates that RevPAR growth was negatively impacted by approximately 155 bps year-over-year due to the renovation disruption at the Marriott San Francisco Airport Waterfront, the Aston Waikiki Beach Resort, the Andaz Napa and the Hyatt Regency Santa Clara.

Acquisitions

Subsequent to the end of the quarter, the Company completed the acquisition of three high-quality lifestyle boutique hotels for a combined purchase price of $245 million. The 84-room RiverPlace Hotel located in downtown Portland, the 97-room Canary Hotel located in downtown Santa Barbara, and the 230-room Hotel Palomar located in downtown Philadelphia will all continue to be managed by Kimpton Hotels & Resorts.

Additionally, in August 2015 the Company announced it had entered into a purchase agreement to acquire the Hotel Commonwealth in Boston for a purchase price of $136 million. The transaction is subject to customary closing conditions and the completion of the current hotel expansion, including a new 96-room wing with 7,000 square feet of additional meeting space, and is expected to close early in 2016. The hotel will continue to be managed by Sage Hospitality.

"We are very excited to have added the three Kimpton hotels and look forward to adding the Hotel Commonwealth upon completion of its expansion project" added Mr. Verbaas. "These acquisitions exemplify the continued execution of our strategy to own a diverse portfolio of high quality assets in top lodging markets and key leisure destinations. We are looking forward to working with Kimpton and Sage to build on the already strong results at these outstanding lifestyle boutique hotels."

Hotels Under Development

The Grand Bohemian Charleston, a 50-room Autograph Collection hotel located in Charleston, South Carolina in which the Company 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 $31 million, of which $28 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 the Company 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 $44 million, of which $34.5 million has been incurred to date.

Capital Investments

The Company invested $11.7 million of capital in its hotels during the second quarter (excluding expenditures to remediate the Napa earthquake damage) and completed its $18 million renovation of the Marriott San Francisco Airport Waterfront renovation, which included the addition of three guest rooms to the hotel. An additional room was also recently added at the Hyatt Regency Santa Clara and the earthquake remediation at the two Napa hotels has been completed at a total cost of approximately $9.5 million, most of which is related to the Andaz Napa. We will begin a comprehensive renovation of the guest rooms at the Napa Valley Marriott Hotel & Spa in December, which is expected to be completed in the first quarter of 2016.

Balance Sheet

During the quarter, the Company paid off the $55.2 million mortgage encumbering the Hilton Garden Inn Washington D.C. Downtown. As of June 30, 2015, the Company had total outstanding debt of $1.1 billion, with no outstanding borrowings on its $400 million senior unsecured credit facility and a weighted average interest rate of 3.93%. In connection with the acquisition of the three hotels in July 2015, the Company borrowed $127 million on its revolving line of credit. Total net debt to trailing 12 month pro forma Corporate EBITDA (as defined in the Company's senior unsecured credit facility) was 3.5x as of June 30, 2015. As of June 30, 2015, the Company had $197 million of cash and cash equivalents.

2015 Outlook and Guidance

The Company has updated its outlook for 2015, incorporating the recent acquisitions of the RiverPlace Hotel, the Canary Hotel and the Hotel Palomar which are expected to generate EBITDA of $7 million to $8 million for the remainder of 2015. Additionally the Company's outlook for 2015 is based on the current economic environment, incorporates all expected renovation disruption, assumes no further acquisitions or dispositions, includes the completion of its two development properties, and takes into consideration its second quarter performance.

The Company's 2015 capital expenditure range includes its renovation projects, but excludes earthquake damage remediation at the Napa hotels. The Company's financial expectations for 2015 are as follows:

Quarter 2015 Earnings Call

The Company will conduct its quarterly conference call on Thursday, August 13, 2015 at 11:00 AM eastern time. To participate in the conference call, please dial (855) 656-0921. Additionally, a live webcast of the conference call will be available through the Company's website, www.xeniareit.com. A replay of the conference call will be archived and available online through the Investor Relations section of the Company's website for 90 days.

About Xenia Hotels & Resorts, Inc.

Xenia Hotels & Resorts, Inc. is a self-advised and self-administered REIT that invests primarily in premium full service, lifestyle and urban upscale hotels, with a focus on the top 25 U.S. lodging markets as well as key leisure destinations in the United States. The Company owns 49 hotels, comprising 13,054 rooms, across 20 states and the District of Columbia, and has a majority interest in two hotels under development. Xenia's 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 Xenia's business, refer to the Company website at www.xeniareit.com.

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company's future plans, strategies and expectations. Forward-looking statements are generally identifiable by use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "illustrative," references to "outlook," and 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 EBITDA, Adjusted FFO, capital expenditures and derivations thereof, financial performance, prospects or future events. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company's dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks, downturns in general and local economic conditions and cancellation of or delays in the completion of anticipated demand generators, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, (viii) risks associated with redevelopment and repositioning projects, including delays and cost overruns 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.

For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company's website at www.xeniareit.com.

All information in this press release is as of the date of its release. The Company undertakes no duty to update the statements in this press release to conform the statements to actual results or changes in the Company's expectations.

Contact:

Andrew Welch, Chief Financial Officer, Xenia Hotels & Resorts, (407) 317-6950

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

See accompanying notes to the combined condensed consolidated financial statements in the Company's Form 10-Q.

See accompanying notes to the combined condensed consolidated financial statements in the Company's Form 10-Q.

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, 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.