Xenia Hotels & Resorts, Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on May 27, 2021, by Xenia Hotels & Resorts, Inc. (NYSE: XHR). The filing details the entry into a material definitive agreement involving the issuance of senior secured notes and amendments to existing credit facilities.
Key Financial Metrics and Capital Structure
- Debt Issuance: XHR LP, a subsidiary of the Company, issued $500 million aggregate principal amount of 4.875% Senior Secured Notes due 2029.
- Interest Rate: 4.875% per annum, payable semi-annually in cash commencing December 1, 2021.
- Maturity Date: June 1, 2029.
- Use of Proceeds: Net proceeds were used to repay in full borrowings under the revolving credit facility and to prepay in full the corporate credit facility term loan maturing in August 2023. Remaining proceeds are designated for general corporate purposes.
- Collateral: The Notes are secured by a first priority security interest in the equity interests of a material portion of the Issuer's subsidiaries, including unencumbered properties in 15 markets. Collateral is expected to be released if certain financial covenants under corporate credit facilities are met.
Material Changes and Agreements
Substantially concurrently with the note issuance, the Company amended its revolving credit facility and term loan. Key changes include:
- Extension of the covenant waiver period until financial statements for the quarter ending June 30, 2022, are delivered.
- Adjustment of mandatory prepayment requirements to limit repayments from asset sales or equity issuances solely to the revolving credit facility.
- Increased flexibility to acquire properties and make capital expenditures during the covenant waiver period.
Outlook, Risks, and Covenants
The Indenture imposes customary covenants limiting the Issuer's ability to incur additional debt, create liens, make distributions, or engage in certain transactions. A specific financial covenant requires the Issuer to maintain total unencumbered assets of at least 150% of total unsecured indebtedness on a consolidated basis.
Redemption Provisions: The Issuer may redeem the Notes prior to June 1, 2024, at a make-whole premium. Post-2024 redemption prices range from 102.438% to 100.000% depending on the timing. Up to 40% of the Notes may be redeemed prior to June 1, 2024, using proceeds from equity offerings at 104.875% of principal.
Change of Control: In the event of a change of control or specific credit rating downgrades, the Issuer must offer to repurchase the Notes at 101% of the aggregate principal amount plus accrued interest.
Investor Verification Checklist
- Verify the full text of the Indenture (Exhibit 4.1) and Note form (Exhibit 4.2) for complete covenant details and exceptions.
- Review the specific terms of the credit facility amendments (Exhibits 4.3 and 4.4) to understand the extended covenant waiver period and prepayment limitations.
- Monitor the Company's ability to meet the 150% unencumbered assets to unsecured indebtedness ratio to determine when the Notes will become unsecured.
- Confirm the status of the revolving credit facility commitments, which were not permanently reduced despite the repayment of borrowings.