Xenia Hotels & Resorts Completes Sale of Fairmont Dallas

Rhea-AI Summary

Xenia Hotels & Resorts (NYSE: XHR) has announced the sale of the 545-room Fairmont Dallas for $111 million, or approximately $203,670 per key. The sale price represents an 8.6x multiple on Hotel EBITDA and a 10.0% capitalization rate on Net Operating Income for the twelve months ended February 28, 2025.

The property, originally acquired in 2011 for $69 million, delivered an unlevered IRR of 11.3% during Xenia's ownership period, despite pandemic impacts in 2020-2021. The sale helps Xenia avoid an estimated $80 million in near-term capital expenditures and aligns with their strategy of portfolio quality improvement, as Fairmont Dallas historically underperformed compared to portfolio averages in RevPAR and EBITDA/key.

The property was expected to generate approximately $8 million in Hotel EBITDA for the remainder of 2025. Net proceeds will be used for general corporate purposes, including potential debt repayments, acquisitions, and share repurchases.

Positive

• Sale price of $111 million represents a 61% gain over 2011 purchase price of $69 million
• Transaction achieved 11.3% unlevered IRR despite pandemic impacts
• Sale helps avoid $80 million in required near-term capital expenditures
• 8.6x EBITDA multiple and 10.0% cap rate indicate favorable valuation
• Disposal of underperforming asset improves overall portfolio quality metrics

Negative

• Loss of approximately $8 million in expected Hotel EBITDA for remainder of 2025
• Property's RevPAR and EBITDA/key were below portfolio averages
• Upcoming Dallas Convention Center redevelopment could negatively impact market performance

Insights

Financial Analyst

Xenia Hotels & Resorts' $111 million sale of the Fairmont Dallas represents a strategically sound transaction that strengthens the REIT's financial position and portfolio quality. At $203,670 per key, the deal reflects an 8.6x EBITDA multiple and 10.0% capitalization rate—solid metrics that become even more favorable when considering the $80 million in near-term capital expenditures now avoided.

The transaction delivers excellent returns on XHR's original $69 million investment made in 2011, generating an 11.3% unlevered IRR over the 14-year holding period despite significant pandemic disruption. This performance demonstrates management's operational effectiveness while recognizing the optimal exit timing before deploying substantial additional capital.

This divestiture reflects prudent capital allocation for three key reasons: First, it eliminates exposure to potential market disruption from the upcoming Dallas Convention Center redevelopment. Second, it removes an underperforming asset that trailed portfolio averages in RevPAR and EBITDA per key. Third, while forgoing $8 million in Hotel EBITDA for the remainder of 2025, the transaction significantly improves the company's investment opportunity set.

The proceeds provide valuable financial flexibility in the current environment, enabling XHR to reduce debt, pursue higher-quality acquisitions, or enhance shareholder returns through its repurchase program. This transaction aligns perfectly with management's stated strategy of upgrading portfolio quality while maintaining balance sheet strength.

ORLANDO, Fla., April 11, 2025 /PRNewswire/ -- Xenia Hotels & Resorts, Inc. (NYSE: XHR) ("Xenia" or the "Company") today announced that it has sold the 545-room Fairmont Dallas for $111 million, or approximately $203,670 per key. The transaction price represents an 8.6x multiple and a 10.0% capitalization rate on the property's Hotel EBITDA and Net Operating Income for the twelve months ended February 28, 2025, respectively. These transaction price metrics are exclusive of an estimated $80 million of near-term capital expenditures. The Company expected Fairmont Dallas would have earned approximately $8 million of Hotel EBITDA for the remainder of 2025.

"We are pleased to have completed the sale of Fairmont Dallas, which opened in 1969 and which we acquired in 2011 for $69 million," said Marcel Verbaas, Chair and Chief Executive Officer of Xenia. "The unlevered IRR during our ownership period is 11.3%, which is an excellent outcome for this investment, particularly given the pandemic's significant negative impact on cash flows during 2020 and 2021. The disposition reflects our ongoing focus on upgrading the quality of the portfolio, prudent capital allocation, and maintaining balance sheet strength and flexibility. Because of the property's significant and disruptive near-term capital needs as well as the expected impact on the market from the upcoming redevelopment of the Dallas Convention Center, we believe that this sale and the avoidance of the significant additional capital investment is a superior outcome for the Company relative to continued ownership and re-investment. Additionally, the transaction has increased the overall quality of our portfolio, as Fairmont Dallas' historical RevPAR and EBITDA/key trailed meaningfully below our portfolio averages."

Net proceeds from the sale will be utilized for general corporate purposes, which may include debt repayments, potential acquisitions consistent with the Company's strategy, and/or share repurchases under the Company's existing authorization.

About Xenia Hotels & Resorts, Inc.
Xenia Hotels & Resorts, Inc. is a self-advised and self-administered REIT that invests in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States. The Company owns 30 hotels comprising 8,868 rooms across 14 states.  Xenia's hotels are in the luxury and upper upscale segments, and operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton, Fairmont, Loews, Hilton, and The Kessler Collection. For more information on Xenia's business, refer to the Company website at www.xeniareit.com.

For additional information or to receive press releases via email, please visit our website at www.xeniareit.com

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SOURCE Xenia Hotels & Resorts, Inc.

FAQ

How much did Xenia Hotels (XHR) sell Fairmont Dallas for in 2025?

Xenia Hotels sold Fairmont Dallas for $111 million, representing approximately $203,670 per room key.

What return did XHR achieve on its Fairmont Dallas investment since 2011?

XHR achieved an 11.3% unlevered IRR on Fairmont Dallas, which was purchased for $69 million in 2011.

How much capital expenditure did XHR avoid through the Fairmont Dallas sale?

The sale helped XHR avoid an estimated $80 million in near-term capital expenditures.

What will XHR do with the proceeds from the Fairmont Dallas sale?

Net proceeds will be used for general corporate purposes, including potential debt repayments, acquisitions, and share repurchases.

How much EBITDA was Fairmont Dallas expected to generate for XHR in remaining 2025?

Fairmont Dallas was expected to generate approximately $8 million in Hotel EBITDA for the remainder of 2025.