Xenia Hotels & Resorts, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report. Xenia is a REIT focused on luxury and upper-upscale U.S. hotels and resorts; at year-end it owned 34 hotels with 9,659 rooms across 14 states. All properties had resumed operations by the end of May 2021.
Financial performance
| Metric | 2021 | 2020 | Change / context |
|---|---|---|---|
| Total revenue | $616.2 million | $369.8 million | Up 66.6%; remained below 2019 revenue of $1.149 billion |
| Occupancy | 47.5% | 27.1% | Up 20.4 percentage points |
| ADR | $218.41 | $198.88 | Up 9.8% |
| RevPAR | $103.64 | $53.88 | Up 92.4% |
| Hotel operating income | $170.1 million | $18.2 million | Up 832.6%; calculated margin rose to 27.6% from 4.9% |
| Operating loss | $(60.9) million | $(241.7) million | Improved, but remained a loss |
| Net loss | $(146.6) million | $(166.9) million | Loss narrowed 12.1%; diluted loss per share was $1.26 versus $1.44 |
| Adjusted EBITDAre | $108.1 million | $(51.7) million | Up 308.9% as reported by the company |
| Adjusted FFO | $32.0 million | $(94.0) million | Up 134.1% as reported by the company |
| Cash from operations | $40.8 million | $(77.7) million | Improved with the operating recovery |
| Capital expenditures | $31.8 million | $69.2 million | Lower than historical pre-pandemic spending levels |
Adjusted EBITDAre, FFO and Adjusted FFO are non-GAAP measures; the filing cautions they are not substitutes for GAAP results or measures of liquidity.
Liquidity, debt and capital allocation
- Year-end cash and cash equivalents were $517.4 million; restricted cash and escrows were $36.9 million, for $554.2 million combined. The revolving credit facility had no balance outstanding, with $523 million available at year-end; commitments were scheduled to decline to $450 million in February 2022.
- Debt outstanding was approximately $1.515 billion gross ($1.494 billion net of unamortized financing items), with a 5.18% weighted-average interest rate and 4.8-year weighted-average maturity. There were no scheduled debt maturities until 2024, apart from scheduled amortization.
- In May 2021, Xenia issued $500 million of 4.875% senior notes due 2029 and used proceeds to repay its revolver, a $150 million term loan and the Kimpton Hotel Palomar Philadelphia mortgage. It also had $500 million of 6.375% senior notes due 2025.
- Two mortgage loans were out of covenant compliance at year-end, allowing lenders the option to impose cash sweeps; the filing reported no resulting event of default. The corporate credit facility covenant-waiver period was extended through delivery of financial statements for the quarter ending June 30, 2022, with modified covenant testing thereafter.
- The common dividend remained suspended throughout 2021, and share repurchases were prohibited during the applicable covenant period. The company did not provide a specific timetable or quantified guidance for resuming distributions.
Material changes, outlook and risks
- Recovery remained uneven. Leisure demand strengthened through much of 2021; Delta-related softness affected August and September, occupancy recovered in October and November, and demand weakened again in December amid rising COVID-19 cases. Group cancellations for early 2022 meetings were estimated at approximately $5 million, net of cancellation and attrition revenue and rebooked events.
- Dispositions and impairments: Xenia sold Marriott Charleston Town Center for $5 million in November 2021 and recorded a $12.6 million impairment before sale. It recorded a $15.7 million impairment on Kimpton Hotel Monaco Chicago, sold in January 2022 for $36 million. Total 2021 impairment and other losses were $30.4 million.
- Subsequent transaction: In February 2022, Xenia agreed to acquire W Nashville for $328.7 million; the filing said closing was expected in first-quarter 2022 and a $10 million deposit had become at risk. The company also repaid the $65 million Ritz-Carlton, Pentagon City mortgage in January 2022 and incurred swap termination costs.
- Management outlook: Management described recovery timing as uncertain and expected business-transient and group demand to lag broader economic recovery. It cited labor shortages, wage increases and supply-chain constraints as operating challenges. No quantified earnings or operating guidance is provided in the supplied filing text.
- Principal risks: COVID-19 and future variants; dependence on travel, business meetings and group demand; inflation and fixed hotel costs; concentration in luxury/upscale properties, three brand families and states including Texas, California and Florida; reliance on third-party managers; covenant restrictions and refinancing risk; and weather, climate, insurance and property risks.
- Unusual items: 2020 results included $93.6 million of gains on property sales and $28.8 million of forfeited transaction deposits, which complicate year-over-year comparisons. 2021 results included $2.8 million of interest-rate-swap termination costs and $1.6 million of business-interruption insurance gains.
Key facts investors should verify
- Track post-year-end operating trends, particularly occupancy, ADR, RevPAR and the recovery in business-transient and group bookings.
- Confirm W Nashville’s closing, financing and expected contribution relative to the $328.7 million purchase price.
- Monitor the two mortgage cash-sweep options and the company’s progress toward covenant compliance as waiver provisions expire and testing resumes.
- Review debt maturities, interest costs, available revolver capacity and restrictions on the use of equity proceeds or distributions.
- Assess the sustainability of operating cash flow and the conditions for any dividend reinstatement; 2021 Adjusted EBITDAre and FFO do not themselves establish cash available for distributions.
- Evaluate whether further impairments, renovation commitments, labor and supply costs, or weather-related losses could affect liquidity and property values.