Xenia Hotels (XHR) Tops Q4 EPS by 69c, Revenues Beat

Xenia Hotels (NYSE: XHR) reported Q4 EPS of $0.88, $0.69 better than the analyst estimate of $0.19. Revenue for the quarter came in at $275.66 million versus the consensus estimate of $268.82 million.

• Net Income: Net income attributable to common stockholders was $100.0 million, including an $81.2 million gain on sale of investment properties, and net income per diluted share was $0.88.
• Same-Property RevPAR: Same-Property RevPAR increased 1.6% compared to the fourth quarter of 2017 to $158.70, driven by a 2.5% increase in ADR, offset by a 62 basis point decline in occupancy.
• Same-Property Hotel EBITDA Margin: Same-Property Hotel EBITDA Margin was 27.6%, an increase of 47 basis points compared to the fourth quarter of 2017.
• Total Portfolio RevPAR: Total Portfolio RevPAR was $158.30, a 4.0% increase compared to the fourth quarter of 2017 reflecting portfolio performance and the changes in portfolio composition.
• Adjusted EBITDAre: Adjusted EBITDAre grew $7.6 million to $75.7 million, an increase of 11.2% compared to the fourth quarter of 2017.
• Adjusted FFO per Diluted Share: Adjusted FFO per diluted share was $0.58, an increase of 11.5% compared to the fourth quarter of 2017.
• Transaction Activity: As previously announced, the Company completed the acquisitions of Park Hyatt Aviara Resort, Golf Club & Spa and the newly-branded Waldorf Astoria Atlanta Buckhead, as well as a free-standing restaurant in the same mixed-use development in Buckhead, for total consideration of $230.5 million. Additionally, the Company completed the buyout of its joint venture partner\'s minority interest in two hotels for $12.2 million. Also during the quarter, the Company completed the sale of two hotels for a combined sales price of $220 million.
• Financing Activity: The Company funded $65 million on its $150 million unsecured term loan and paid off two mortgage loans totaling $43 million.
• Dividends: The Company declared its fourth quarter dividend of $0.275 per share to common stockholders of record on December 31, 2018.

"The fourth quarter of 2018 was an exciting one for the Company as we not only experienced strong operating performance, but also continued our process of upgrading the portfolio through thoughtful acquisitions and dispositions," commented Marcel Verbaas, Chairman and Chief Executive Officer of Xenia. "We were pleased with top-line performance as our Same-Property RevPAR increased by 1.6%, building on the 4.7% RevPAR growth our current Same-Property portfolio achieved in the fourth quarter of 2017, as well as our margin improvement of 47 basis points. The increase in top-line revenue in 2018 speaks to the strength of demand at various hotels throughout our portfolio during the quarter, especially when considering the increased post-hurricane demand that aided the performance of our hotels in Orlando and Houston in 2017. While RevPAR in these two markets remained relatively flat after significant growth in the prior year, additional bright spots in our portfolio included markets such as Napa, Phoenix, Boston, and Santa Clara with RevPAR increases of 15.8%, 8.5%, 6.7%, and 4.3%, respectively, as well as our hotels in San Francisco and Dallas, which were able to grow RevPAR after achieving 12.1% and 13.9% increases in the fourth quarter of 2017."

2019 Outlook

The Company's outlook for 2019 is based on the current economic environment, incorporates all expected renovation disruption, and assumes no additional acquisitions, dispositions, equity offerings, or share repurchases. Same-Property RevPAR change includes all 40 hotels owned as of February 26, 2019.

Additional guidance assumptions:

• Disruption due to renovations is expected to negatively impact Same-Property RevPAR Change by approximately 20 basis points.
• In 2018, the three hotels that were sold during the year contributed approximately $19 million to Adjusted EBITDAre.
• General and administrative expense of $21 million to $23 million, excluding non-cash share-based compensation.
• Interest expense of $50 million to $52 million, excluding non-cash loan related costs.
• Income tax expense of approximately $6 million.
• 114.4 million weighted average diluted shares and units outstanding.

"We expect moderate RevPAR growth to result in a slight decline in Adjusted EBITDAre in 2019 relative to 2018. Our expectations for improved performance at recently-renovated hotels and newly-acquired properties are being offset by expense growth resulting from higher wage and benefit costs and greater real estate tax and insurance expenses. We continue to be excited about the long-term growth opportunities embedded in our portfolio, stemming from recent acquisitions and capital expenditure projects. Due to the recent moves we have made, as well as our strong balance sheet, we believe the company is well-positioned for earnings growth and continued portfolio enhancement in the years ahead,\" commented Atish Shah, Chief Financial Officer of Xenia."

For earnings history and earnings-related data on Xenia Hotels (XHR) click here.

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