Amid the ongoing challenging times, Xenia Hotels & Resorts, Inc. XHR has made efforts to improve its liquidity on the back of the amendment of credit facilities and dispositions.
Specifically, the company has executed permanent changes to corporate credit agreements related to its $500-million senior revolving credit facility and four term loan facilities aggregating $575 million. These amendments include changes to the application of mandatory prepayments and enable the company to acquire hotels through additional equity issuance.
In fact, the amendments require that if the outstanding balance in senior revolving credit facility is less than $350 million, Xenia Hotels should use 45% of net proceeds raised through various actions (debt or equity issuances, and dispositions) for the prepayment of facility and two term loans due in 2022.
The remaining proceeds are to be retained by the company and can be used for general corporate purposes as allowed by the amendments.
In line with the amendments, the company utilized net proceeds from its $300-million senior secured notes due 2025, offered on Aug 11, to partially repay the credit facility and term loans.
It has $306 million of balance in its senior revolving credit facility. Moreover, the two term loans maturing in February and October 2022 have $124 million and $89 million outstanding, respectively.
Xenia Hotels has also been active on the disposition front. Markedly, the company agreed to sell Marriott Napa Valley Hotel & Spa — a 275-room property — for $100 million. The transaction is expected to close before the end of the third quarter.
Moreover, it received $7.75 million in non-refundable deposit that was earlier held in escrow following the termination of the Renaissance Atlanta Waverly Hotel & Convention Center sale. The transaction for the 522-room property was failed to close by Jul 31.
Making progress on hotel reopening, 35 of the company's 39 hotels and resorts were open and operating as of July end. These 35 properties had 9,344 rooms ad were 23.9% occupied as of July end. Moreover, average daily rate and RevPAR from the properties were $170.04 and $40.61, respectively.
The rampant coronavirus outbreak is weakening travel demand and compelled the company to withdraw its 2020 guidance.
However, restriction on travel amid the rampant coronavirus outbreak is weakening travel demand. In fact, delays or cancellation of conventions, and conferences and other large public gatherings, which are typically demand-drivers at hotels are impacting the company’s performance.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 53.8% over the past year compared with the industry’s decline of 8.6%.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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