#United States #Orlando #Real Estate #Xenia Hotels #Fairmont Dallas

Xenia Hotels & Resorts Sells Fairmont Dallas for $111 Million

Xenia Hotels & Resorts, Inc. (NYSE: XHR), a self-advised and self-administered Real Estate Investment Trust (REIT), announced a significant transaction in the hospitality sector: the sale of the Fairmont Dallas, a prominent 545-room hotel, for $111 million. This sale, priced at approximately $203,670 per room, reflects an 8.6 times multiple and a 10.0% capitalization rate derived from the hotel's net operating income and Hotel EBITDA for the year ending February 2025. Notably, this figure does not include an expected $80 million estimated for upcoming capital expenditures.

The decision to sell Fairmont Dallas comes as part of a broader strategy aimed at enhancing the portfolio quality. Marcel Verbaas, Chair and CEO of Xenia, expressed satisfaction with the sale, emphasizing that the hotel was originally acquired in 2011 for $69 million. The internal rate of return (IRR) during their ownership period was an impressive 11.3%, especially considering the adverse effects of the global pandemic on hotel revenues in 2020 and 2021.

Verbaas stated, "Selling Fairmont Dallas was a prudent decision given the imminent capital needs of the property, coupled with the anticipated impacts of planned redevelopment at the nearby Dallas Convention Center. This sale alleviates the burden of future capital investments, while still allowing us to refine our portfolio quality. The historical revenue per available room (RevPAR) and EBITDA were considerably lower than our average, making this transaction beneficial from a financial perspective."

The net proceeds from the sale are intended for general corporate purposes, which could encompass debt repayments or financing for potential new acquisitions that align with Xenia's growth strategy. This sale marks a crucial step in Xenia's mission to refine its portfolio, ensuring that each asset aligns with their strategic objectives and maintains strong financial performance.

Xenia Hotels & Resorts, known for its focus on luxury and upscale segments, operates 30 hotels across 14 states, accumulating a total of 8,868 rooms. The company’s properties are operated by well-regarded brands such as Marriott, Hyatt, Fairmont, and Hilton, reinforcing its position in the competitive hospitality market.

The Fairmont Dallas was established in 1969, making it a notable fixture in the Dallas hotel landscape. However, as part of its long-term strategy, Xenia is proactively engaging in portfolio optimization, focusing on high-performing assets that can provide sustainable growth. By divesting a property that necessitated substantial capital expenditures, Xenia not only protects its balance sheet but also positions itself favorably for future investment opportunities.

In conclusion, the sale of Fairmont Dallas is a pivotal moment for Xenia Hotels & Resorts. It reflects an astute maneuver to not only solidify financial standing but also enhance overall portfolio quality in an ever-evolving market. Investors and stakeholders can look forward to how Xenia will leverage the proceeds from this sale in pursuit of new ventures and property acquisitions while maintaining its reputation in the luxury hotel sector.