Xenia Hotels & Resorts, Inc. provided an update on pending transactions, as well as an update on the impact of COVID-19 on its operations.

 

Transaction Updates 

In the first quarter, the Company entered into an agreement to sell the 522-room Renaissance Atlanta Waverly Hotel & Convention Center for $155 million. The transaction was initially expected to close in March 2020, but the parties subsequently agreed to extend the closing until July 31, 2020. The buyer has a $7.75 million non-refundable deposit at risk should the transaction not proceed.

Based on the current status of the financial markets, and overall economic uncertainty, the Company can make no assurances that any of the three aforementioned transactions will close as agreed upon, or at all.

If the transactions are not completed as a result of the respective buyer parties’ default, the Company expects to receive the non-refundable deposits which are currently held in escrow.

 

Operation Updates

The impact of the COVID-19 pandemic on the company's operations has increased significantly, with the vast majority of group business for April and May now having been canceled and both business transient and leisure demand declining significantly throughout the portfolio, consistent with trends throughout the U.S. lodging industry.

The Company’s operating partners have lowered hotel operating expenses, primarily by adjusting staffing levels in response to the significant reduction in demand. Specific actions vary by property, with a range that includes closure of restaurants, bars, amenities, floors, wings or the entire property.

At present, 24 of the Company’s hotels and resorts have temporarily suspended operations or are in the process of temporarily suspending operations. The remainder of the Company’s properties are currently operating at reduced levels; however, the Company may temporarily suspend the operations at additional hotels in the future as a result of the COVID-19 pandemic.

In addition to the expense-reduction efforts undertaken at the properties, the Company expects to reduce its corporate full-year cash general and administrative expense by over 20%, or approximately $5 million, primarily resulting from lower executive incentive compensation, as well as a reduction in other costs. The Company will evaluate further expense reductions as appropriate.

 

Capital Expenditures

With respect to capital expenditures, Xenia has reviewed its capital program for 2020 and is canceling or deferring approximately $50 million of capital expenditures, representing a 40% reduction. The Company's current estimate for full-year capital expenditures is approximately $70 million.

This estimate primarily reflects projects that are currently in-progress or for which materials have been ordered. Most of these expenditures relate to the transformative renovation of Park Hyatt Aviara Resort, Golf Club & Spa and the guestroom renovation at Marriott Woodlands Waterway Hotel & Convention Center. Each of these projects has been adjusted, in terms of timing or scope, to reduce 2020 capital outlays.

In order to bolster the Company’s unrestricted cash position and to help meet its ongoing operational and financial obligations, the Company drew the remaining $340 million on its $500 million Senior Unsecured Revolving Credit Facility on March 17, 2020. The Company’s previously declared first quarter dividend will be paid on April 15, 2020 to shareholders of record as of March 31, 2020.

Xenia expects to suspend its dividend through the balance of the year until it determines the required dividend amount to cover its taxable income for 2020.

For more information, please visit xeniareit.com.

 

 

 

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