Xenia Hotels & Resorts(XHR) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results & Highlights Xenia Hotels & Resorts reported strong Q1 2025 results, exceeding expectations with double-digit growth in Adjusted EBITDAre and FFO per share, driven by RevPAR gains, but adopted a cautious full-year outlook due to macroeconomic uncertainty Q1 2025 Performance Summary The company's first quarter exceeded expectations, with Adjusted EBITDAre growing by 11.8% and Adjusted FFO per share increasing by 15.9%, complemented by strategic capital allocation - CEO Marcel Verbaas highlighted that portfolio performance exceeded expectations, leading to nearly 12% growth in Adjusted EBITDAre and nearly 16% growth in Adjusted FFO per share; however, due to heightened macroeconomic uncertainty, the company has slightly reduced its full-year revenue and earnings growth expectations[4] First Quarter 2025 Key Metrics vs. Q1 2024 | Metric | Q1 2025 Value | Change vs. Q1 2024 | | :--- | :--- | :--- | | Net Income | $15.6 million | - | | Adjusted EBITDAre | $72.9 million | +11.8% | | Adjusted FFO per Diluted Share | $0.51 | +15.9% | | Same-Property Occupancy | 69.3% | +180 bps | | Same-Property ADR | $272.41 | +3.6% | | Same-Property RevPAR | $188.73 | +6.3% | | Same-Property Hotel EBITDA | $79.3 million | +10.5% | | Same-Property Hotel EBITDA Margin | 27.4% | +42 bps | - Key strategic activities included acquiring the land under Hyatt Regency Santa Clara for $25 million, drawing on a $100 million term loan, increasing the quarterly dividend by 17% to $0.14 per share, and repurchasing 2.73 million shares for approximately $35.8 million[5][6] Operating and Financial Performance The company demonstrated robust financial health in Q1 2025, with significant year-over-year growth in net income and key operational metrics, maintaining a strong balance sheet with substantial liquidity and a structured debt profile Operating Results In the first quarter of 2025, Xenia achieved substantial growth compared to the same period in 2024, with net income attributable to common stockholders surging by 82.6% to $15.6 million, and Same-Property RevPAR increasing by 6.3% to $188.73 Q1 2025 vs. Q1 2024 Operating Results | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | $15.6 million | $8.5 million | 82.6% | | Net income per diluted share | $0.15 | $0.08 | 87.5% | | Same-Property RevPAR | $188.73 | $177.50 | 6.3% | | Same-Property Hotel EBITDA | $79.3 million | $71.7 million | 10.5% | | Adjusted EBITDAre | $72.9 million | $65.3 million | 11.8% | | Adjusted FFO per diluted share | $0.51 | $0.44 | 15.9% | Liquidity and Balance Sheet As of March 31, 2025, the company maintained a strong liquidity position with approximately $613 million, comprising $113 million in cash and full availability on its $500 million revolving credit facility, with total outstanding debt at approximately $1.4 billion - As of March 31, 2025, the company had total liquidity of approximately $613 million[10] Balance Sheet Summary (as of March 31, 2025) | Item | Amount | | :--- | :--- | | Total Outstanding Debt | ~$1.4 billion | | Weighted-Average Interest Rate | 5.67% | | Cash and Cash Equivalents | ~$113 million | | Revolving Line of Credit Availability | Full ($500 million) | - In January, the company exercised the $100 million delayed draw feature on its term loan, leaving the $500 million revolving line of credit fully undrawn[11] Portfolio and Capital Strategy Xenia executed a multi-faceted capital strategy in Q1 2025 focused on enhancing shareholder value and portfolio quality, including significant share repurchases, a strategic land acquisition, and the divestiture of a non-core asset, while prudently managing capital expenditures Capital Markets During the first quarter, the company actively returned capital to shareholders by repurchasing 2,733,149 shares of common stock for a total of $35.8 million, leaving $82.1 million available under its current repurchase authorization - The company repurchased 2,733,149 shares of common stock at a weighted-average price of $13.09 per share, for a total of approximately $35.8 million[12] - The company has $82.1 million in capacity remaining under its share repurchase authorization as of the end of the quarter[12] Transactions The company completed two significant transactions to improve portfolio quality and financial flexibility, acquiring the land under the Hyatt Regency Santa Clara for $25 million and subsequently selling the Fairmont Dallas for $111 million - In March, acquired the fee simple interest in the land underlying Hyatt Regency Santa Clara for $25 million, eliminating a ground lease set to expire in 2035[13] - Subsequent to quarter end, sold the 545-room Fairmont Dallas for $111.0 million, or approximately $203,670 per key[14] - The Fairmont Dallas sale price represented an 8.6x multiple on Hotel EBITDA and a 10.0% capitalization rate on NOI, excluding an estimated $80 million of near-term capital expenditures[14] Capital Expenditures In Q1 2025, Xenia invested $32.4 million in portfolio improvements, primarily for the transformative renovation of the Grand Hyatt Scottsdale Resort, while deferring some planned renovations due to potential tariff impacts and macroeconomic conditions - Invested $32.4 million in portfolio improvements during Q1 2025, largely related to the Grand Hyatt Scottsdale Resort renovation[15] - The company has deferred guest room renovations at Andaz Napa and The Ritz-Carlton, Denver, which were planned for Q4 2025, due to potential cost impacts from tariffs[18] - Select upgrades will continue at several properties, including Fairmont Pittsburgh, Marriott San Francisco Airport Waterfront, and Hyatt Centric Key West[19] Full Year 2025 Outlook Reflecting increased macroeconomic uncertainty, Xenia has updated its full-year 2025 guidance, anticipating lower Net Income, Adjusted EBITDAre, and Adjusted FFO, with a revised Same-Property RevPAR growth forecast of 2.50% to 6.50% for a 30-hotel portfolio and a $25 million reduction in capital expenditure plans Updated Full Year 2025 Guidance The company has lowered its full-year 2025 guidance, with Adjusted EBITDAre now projected to be between $235 million and $261 million, and Adjusted FFO per share expected in the range of $1.50 to $1.75, accounting for the Fairmont Dallas sale, reduced G&A expenses, and a lower share count Current Full Year 2025 Guidance | Metric | Low End | High End | Variance to Prior (Midpoint) | | :--- | :--- | :--- | :--- | | Net Income | $43 million | $69 million | $(37) million | | Same-Property (30 Hotel) RevPAR Change | 2.50% | 6.50% | (0.50)% (vs. 31 Hotel) | | Adjusted EBITDAre | $235 million | $261 million | $(6) million | | Adjusted FFO per Diluted Share | $1.50 | $1.75 | $(0.02) | | Capital Expenditures | $75 million | $85 million | $(25) million | - Key guidance assumptions include a net decrease of approximately $4 million to Adjusted EBITDAre from recent transactions, general and administrative expense of approximately $23 million (a $1 million decrease from prior guidance), and weighted-average diluted shares of 101.6 million (a decrease of 2.2 million shares)[22][23] Financial Statements This section presents the company's core financial statements as of and for the period ended March 31, 2025, including the Condensed Consolidated Balance Sheets, Statements of Operations, and a detailed summary of the company's debt structure, providing a comprehensive overview of Xenia's financial position and performance Condensed Consolidated Balance Sheets As of March 31, 2025, Xenia's total assets stood at $2.89 billion, up from $2.83 billion at the end of 2024, primarily driven by an increase in cash and cash equivalents, while total liabilities rose to $1.64 billion from $1.55 billion, leading to a decrease in total equity to $1.25 billion Balance Sheet Summary ($ in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net investment properties | $2,538,429 | $2,590,821 | | Cash and cash equivalents | $112,564 | $78,201 | | Total assets | $2,889,541 | $2,831,616 | | Debt, net | $1,424,037 | $1,334,703 | | Total liabilities | $1,641,246 | $1,551,283 | | Total equity | $1,248,295 | $1,280,333 | Condensed Consolidated Statements of Operations For the first quarter ended March 31, 2025, total revenues increased to $288.9 million from $267.5 million in the prior-year period, contributing to a significant rise in operating income to $35.9 million from $27.6 million, with net income attributable to common stockholders nearly doubling to $15.6 million Statement of Operations Summary - Q1 ($ in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $288,927 | $267,488 | | Total hotel operating expenses | $195,547 | $183,026 | | Operating income | $35,864 | $27,626 | | Net income attributable to common stockholders | $15,585 | $8,534 | Debt Summary As of March 31, 2025, the company's total debt principal outstanding was approximately $1.44 billion, diversified across fixed-rate mortgage loans, variable-rate corporate credit facilities, and fixed-rate senior notes, with an overall weighted-average interest rate of 5.67% and a fully undrawn $500 million revolving credit facility Debt Composition as of March 31, 2025 ($ in thousands) | Debt Type | Outstanding Balance | Rate Type | | :--- | :--- | :--- | | Mortgage Loans | $213,248 | Fixed | | Corporate Credit Facility Term Loan | $325,000 | Variable | | 2029 Senior Notes | $500,000 | Fixed | | 2030 Senior Notes | $400,000 | Fixed | | Total Debt (before net costs) | $1,438,248 | - | Non-GAAP Financial Measures and Reconciliations This section details the non-GAAP financial measures Xenia uses to supplement its GAAP results, including EBITDAre, Adjusted EBITDAre, FFO, and Adjusted FFO, providing definitions and rationale for their use, along with detailed reconciliation tables to Net Income for historical periods and full-year 2025 guidance Reconciliation of Net Income to EBITDA, EBITDAre, and Adjusted EBITDAre For the first quarter of 2025, the company reconciled a Net Income of $16.5 million to an Adjusted EBITDAre of $72.9 million, representing an 11.8% increase from the $65.3 million reported in Q1 2024, with key adjustments from Net Income including interest expense, depreciation, and amortization Reconciliation of Net Income to Adjusted EBITDAre - Q1 ($ in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $16,507 | $8,967 | | Adjustments (Interest, D&A, etc.) | $55,113 | $53,050 | | EBITDA and EBITDAre | $71,620 | $62,017 | | Further Adjustments | $1,322 | $3,234 | | Adjusted EBITDAre | $72,942 | $65,251 | Reconciliation of Net Income to FFO and Adjusted FFO In Q1 2025, Net Income of $16.5 million was reconciled to Funds from Operations (FFO) of $49.6 million and Adjusted FFO of $52.1 million, resulting in an Adjusted FFO per diluted share of $0.51, a 15.9% increase from $0.44 in the prior-year quarter Reconciliation of Net Income to Adjusted FFO - Q1 ($ in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $16,507 | $8,967 | | Depreciation and amortization | $33,109 | $31,884 | | FFO attributable to common stock and unit holders | $49,616 | $40,851 | | Further Adjustments | $2,444 | $4,647 | | Adjusted FFO | $52,060 | $45,498 | Reconciliation for Full Year 2025 Guidance The company provides reconciliations for its full-year 2025 guidance midpoint, with a projected Net Income of $56 million reconciled to a guided Adjusted EBITDAre of $248 million and a guided Adjusted FFO of $165 million, with key reconciling items including depreciation and amortization ($131 million) and interest expense ($85 million) FY 2025 Guidance Midpoint Reconciliation ($ in millions) | Metric | Amount | | :--- | :--- | | Net income | $56 | | Depreciation and amortization | $131 | | Gain on sale of investment property | $(39) | | FFO | $148 | | Amortization of share-based compensation expense | $14 | | Other | $3 | | Adjusted FFO | $165 | FY 2025 Guidance Midpoint Reconciliation to Adj. EBITDAre ($ in millions) | Metric | Amount | | :--- | :--- | | Net income | $56 | | Interest expense | $85 | | Income tax expense | $2 | | Depreciation and amortization | $131 | | EBITDA | $274 | | Gain on sale of investment property | $(39) | | EBITDAre | $235 | | Amortization of share-based compensation expense | $14 | | Other | $(1) | | Adjusted EBITDAre | $248 | Portfolio Data This section provides a detailed breakdown of the company's portfolio performance, including operating statistics for the Same-Property portfolio as of March 31, 2025 (31 hotels) and the current portfolio as of May 2, 2025 (30 hotels), along with performance data by market, highlighting regional strengths and weaknesses and geographic diversification of earnings Same-Property Operating Data (31 Hotels as of March 31, 2025) For the 31-hotel portfolio owned as of March 31, 2025, Same-Property RevPAR increased 6.3% year-over-year to $188.73 in Q1, driven by strong food and beverage revenue growth, leading to a 10.5% increase in Same-Property Hotel EBITDA to $79.3 million and a 42 basis point margin expansion Same-Property (31 Hotels) Performance - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | RevPAR | $188.73 | $177.50 | 6.3% | | Total Same-Property revenues | $288.9 million | $265.4 million | 8.9% | | Total Same-Property hotel operating expenses | $209.7 million | $193.7 million | 8.2% | | Same-Property Hotel EBITDA | $79.3 million | $71.7 million | 10.5% | | Same-Property Hotel EBITDA Margin | 27.4% | 27.0% | 42 bps | Current Same-Property Operating Data (30 Hotels as of May 2, 2025) The current 30-hotel portfolio, excluding the recently sold Fairmont Dallas and forming the basis for updated 2025 guidance, demonstrated strong Q1 performance with RevPAR of $191.80, a 6.7% increase over the prior year, and Hotel EBITDA of $74.5 million with a margin of 27.0% Current Same-Property (30 Hotels) Performance - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 69.6% | 67.5% | 210 bps | | ADR | $275.47 | $266.14 | 3.5% | | RevPAR | $191.80 | $179.70 | 6.7% | | Hotel EBITDA | $74.5 million | $67.1 million | 10.9% | | Hotel EBITDA Margin | 27.0% | 26.6% | 40 bps | Portfolio Data by Market In Q1 2025, portfolio performance varied significantly across markets, with Phoenix, Washington D.C., and California Central Coast showing strong RevPAR increases, while Portland and Savannah experienced declines, and Houston and Orlando remained the largest contributors to earnings - The Houston and Orlando markets are the largest contributors to earnings, each representing 16% of the 2024 Same-Property Hotel EBITDA[76] Q1 2025 RevPAR % Change by Market (Top & Bottom Performers) | Market | RevPAR % Change | | :--- | :--- | | Top Performers | | | Phoenix, AZ | 33.5% | | Washington, DC-MD-VA | 22.6% | | California Central Coast, CA | 20.4% | | Bottom Performers | | | Portland, OR | (15.2)% | | Savannah, GA | (10.4)% | | Houston, TX | (2.1)% |