Xenia Hotels & Resorts, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This filing reports annual results; it does not provide a clear standalone fourth-quarter income statement. Xenia is a U.S. hotel REIT focused on luxury and upper-upscale properties. At year-end, it owned 32 hotels with 9,508 rooms across 14 states.
Financial and operating highlights
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenue | $997.6 million | $616.2 million |
| Net income (loss) | $57.6 million | $(146.6) million |
| Net income (loss) per diluted share | $0.49 | $(1.26) |
| Operating income (loss) | $111.4 million | $(60.9) million |
| Net cash provided by operating activities | $187.1 million | $40.8 million |
| Cash used in investing activities | $(265.4) million | $(24.2) million |
| Cash used in financing activities | $(110.1) million | Cash provided: $108.9 million |
- Portfolio RevPAR rose 57.0% to $162.75; occupancy increased to 62.9% from 47.5%, and ADR rose 18.5% to $258.76.
- Hotel operating income increased 91.2% to $325.3 million. Revenue grew 61.9%; hotel operating expenses rose 50.7% to $672.3 million.
- Adjusted EBITDAre was $257.0 million versus $108.1 million; Adjusted FFO was $177.3 million versus $32.0 million. These are non-GAAP measures, not substitutes for GAAP earnings or cash flow.
- Year-end cash and cash equivalents were $305.1 million, plus $60.8 million of restricted cash and escrows. The restricted balance included $46.3 million in FF&E reserves. The existing $450 million revolver was undrawn and fully available at year-end.
- Debt was $1.445 billion in principal ($1.429 billion net of discounts and financing costs), with a 5.65% weighted-average rate and 3.9-year weighted-average maturity. About $279.2 million of variable-rate debt was unhedged; a 1 percentage-point rate change was estimated to affect annual earnings and cash flows by approximately $2.8 million.
- Capital expenditures were $70.4 million, compared with $31.8 million in 2021. Year-end renovation-contract commitments were $12.1 million.
Changes, transactions, and shareholder returns
- The recovery in leisure demand continued, with business-transient and group demand accelerating. Revenue growth reflected higher occupancy and ADR as well as the March acquisition of W Nashville.
- Xenia acquired the 346-room W Nashville for approximately $328.5 million, funded with cash. It sold three hotels in 2022 for aggregate gross proceeds of $133.5 million, recording a $27.3 million total gain on investment-property sales. The portfolio ended the year with two fewer hotels than in 2021.
- Net income improved by $204.2 million year over year, principally reflecting stronger hotel operations, lower impairment charges, and gains on property sales. Results also included insurance recoveries and disaster-related costs.
- The company declared $0.20 per common share in 2022, totaling $22.7 million; the dividend had been suspended from the second quarter of 2020 through the second quarter of 2022. 2022 common dividends were 100% taxable as ordinary income.
- Xenia repurchased 1.9 million shares for $28.2 million at an average $14.74 per share. Approximately $166.5 million remained authorized at year-end.
Outlook, risks, and unusual items
- Management described the recovery as broad-based but cautioned that its pace may vary by market and be uneven. The filing gives no numerical company guidance for future revenue, earnings, cash flow, or dividends.
- In January 2023, the company entered a $675 million senior unsecured facility: a $450 million revolver, a $125 million term loan, and a $100 million delayed-draw term loan. The new facility refinanced the prior corporate facilities; the delayed-draw loan repaid the Renaissance Atlanta Waverly mortgage. The revolver matures in January 2027 and the term loans in March 2026, each with a possible one-year extension. Xenia also extended the Andaz Napa loan maturity to January 2028.
- Management cited inflation, wage and labor pressures, rising interest rates, supply-chain constraints, possible recession, and lingering pandemic effects. Other material exposures include the hotel sector’s cyclicality and fixed costs, reliance on third-party managers, brand concentration, regional concentration, refinancing and covenant risks, and natural disasters, climate impacts, and potentially insufficient insurance.
- Notable 2022 items included $3.6 million of insurance proceeds above recognized Hurricane Ida losses, $2.5 million of business-interruption insurance gains, and $1.3 million of hurricane repair and cleanup costs. Legal proceedings arose in the ordinary course; management did not expect them to have a material effect.
- The company reported compliance with debt covenants at December 31, 2022. KPMG issued unqualified opinions on the financial statements and internal control over financial reporting.
Investor verification priorities
- Confirm the durability of the RevPAR recovery and the contribution of transient, group, and leisure demand, especially given the lack of quantified forward guidance.
- Review debt maturities, variable-rate exposure, covenant headroom, and the terms and effects of the January 2023 refinancing.
- Assess how restricted cash, required FF&E reserves, planned renovations, and committed capital spending affect funds available for dividends, buybacks, and debt service.
- Separate recurring hotel performance from property-sale gains and insurance-related income when evaluating earnings and non-GAAP measures.
- Evaluate the return and funding rationale for the W Nashville acquisition, 2022 share repurchases, and the resumed dividend.