Xenia Hotels & Resorts(XHR) - 2025 Q2 - Quarterly Report

Part I - Financial Information Financial Statements The company's financial statements for the six months ended June 30, 2025, reflect significant growth in net income, primarily driven by a $40.0 million gain on the sale of an investment property Condensed Consolidated Balance Sheets The balance sheet shows a 1.5% increase in total assets, a 120.7% surge in cash, and a 4.0% rise in total liabilities, with a slight 1.4% decrease in total equity Balance Sheet Summary (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $2,875,087 | $2,831,616 | +1.5% | | Net Investment Properties | $2,524,277 | $2,590,821 | -2.6% | | Cash and cash equivalents | $172,609 | $78,201 | +120.7% | | Total Liabilities | $1,613,138 | $1,551,283 | +4.0% | | Debt, net | $1,423,681 | $1,334,703 | +6.7% | | Total Equity | $1,261,949 | $1,280,333 | -1.4% | Condensed Consolidated Statements of Operations and Comprehensive Income Total revenues increased by 6.7%, operating income by 31.4%, and net income surged by 199.3% due to a significant gain on property sale Statement of Operations Highlights (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $576,506 | $540,392 | +6.7% | | Operating Income | $76,082 | $57,893 | +31.4% | | Gain on sale of investment properties | $39,953 | $0 | N/A | | Net Income | $75,068 | $25,080 | +199.3% | | Net Income Attributable to Common Stockholders | $70,742 | $23,872 | +196.3% | | Diluted EPS | $0.71 | $0.23 | +208.7% | - For the second quarter of 2025, total revenues grew 5.4% YoY to $287.6 million, and net income attributable to common stockholders surged to $55.2 million from $15.3 million in Q2 2024, largely due to the gain on the sale of an investment property[14] Condensed Consolidated Statements of Changes in Equity Total equity decreased by $18.4 million, driven by share repurchases and dividends, partially offset by net income - For the six months ended June 30, 2025, total equity decreased from $1,280.3 million to $1,261.9 million. Key drivers included net income of $75.1 million, offset by common share repurchases of $71.5 million and dividend payments of $28.1 million[22] Condensed Consolidated Statements of Cash Flows Operating cash flow improved, investing activities generated cash primarily from a property sale, and financing activities used less cash Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $91,079 | $81,939 | | Net cash provided by (used in) investing activities | $27,515 | $(68,014) | | Net cash used in financing activities | $(11,183) | $(31,898) | | Net change in cash | $107,411 | $(17,973) | - The positive cash flow from investing activities in H1 2025 was primarily due to $101.4 million in proceeds from the sale of an investment property, which more than offset $50.8 million in capital expenditures and a $25.4 million property purchase[24] Notes to the Condensed Consolidated Financial Statements Notes detail property portfolio changes, significant asset sales and purchases, debt structure, and capital allocation activities including share repurchases and dividends - As of June 30, 2025, the company owned 30 lodging properties, down from 32 a year prior[32] - In H1 2025, the company purchased the fee simple interest in the land at Hyatt Regency Santa Clara for $25.4 million and sold the Fairmont Dallas for $111.0 million, resulting in a $40.0 million gain[59][60] - Total debt increased to $1.44 billion as of June 30, 2025, from $1.35 billion at year-end 2024. The company drew $100 million from its 2024 Delayed Draw Term Loan in January 2025[61][66][70] - The company repurchased 5.7 million shares for $71.5 million in H1 2025 and declared dividends of $0.28 per share for the period[87][88] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the strong performance in the first half of 2025 to increased occupancy and average daily rates, leading to a 5.1% increase in total portfolio RevPAR Results of Operations Operational results show improved occupancy, average daily rates, and RevPAR, with net income significantly boosted by a property sale and increased hotel operating income Key Performance Indicators (Total Portfolio) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Occupancy | 70.7% | 69.2% | +150 bps | | ADR | $269.57 | $261.95 | +2.9% | | RevPAR | $190.59 | $181.28 | +5.1% | - Net income for H1 2025 increased by 199.3% compared to H1 2024, primarily due to a $40.0 million gain on the sale of Fairmont Dallas and a $23.7 million increase in operating income from comparable hotels[139] - Food and beverage revenues showed strong growth, increasing 14.7% in Q2 and 13.8% in H1 2025 year-over-year, driven by higher occupancy and strong group business demand[143][146][147] Liquidity and Capital Resources The company maintains strong liquidity with substantial cash and an undrawn credit facility, while managing debt and executing share repurchases and capital expenditures - As of June 30, 2025, the company had $172.6 million in cash and cash equivalents and full availability of its $500 million Revolving Credit Facility[171][172] - Total outstanding debt was $1.4 billion with a weighted-average interest rate of 5.67% as of June 30, 2025[175] - In H1 2025, the company repurchased 5.7 million shares for $71.5 million and made capital expenditures of $50.8 million[185][187] Non-GAAP Financial Measures Non-GAAP metrics show strong performance, with Adjusted EBITDAre increasing by 14.1% and Adjusted FFO by 10.4% year-over-year Non-GAAP Performance (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDAre | $152,485 | $133,668 | +14.1% | | Adjusted FFO | $109,466 | $99,198 | +10.4% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is from interest rate changes affecting its variable-rate debt, with increased exposure following the maturity of $225.0 million in interest rate swaps - The company's exposure to interest rate risk increased after interest rate swaps with a notional value of $225.0 million matured in February 2025[212] - A hypothetical 1% permanent increase or decrease in market interest rates on variable rate debt would change annual interest expense by approximately $3.3 million[213] Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[219] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[220] Part II - Other Information Legal Proceedings The company is involved in various legal claims and lawsuits arising in the ordinary course of business, with no expected material adverse effect on financial condition - The company is subject to various legal proceedings from the ordinary course of business but does not expect them to have a material adverse effect on its financial condition[221] Risk Factors There are no new risk factors to report for the period - No updates to risk factors were reported in this filing[222] Unregistered Sales of Equity Securities and Use of Proceeds The company purchased 2.95 million shares for $35.7 million under its repurchase program in Q2 2025, with a $100 million increase authorized in May 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Weighted-Average Price Paid | Total Cost (Approx.) | | :--- | :--- | :--- | :--- | | April 2025 | 0 | $0.00 | $0 | | May 2025 | 1,531,521 | $11.98 | $18.3M | | June 2025 | 1,417,391 | $12.23 | $17.3M | | Total Q2 | 2,948,912 | $12.10 | $35.7M | - In May 2025, the Board of Directors authorized a $100 million increase to the share repurchase program[224] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[225] Other Information No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No adoptions, modifications, or terminations of Rule 10b5-1 trading arrangements by directors or officers occurred during the quarter[227] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, compensatory plans, and required certifications under the Sarbanes-Oxley Act - The report includes various exhibits, such as the Form of Amended and Restated Retirement Policy (2025) and certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002[229]