Inland American Intends To Spin off Its Lodging Subsidiary
Standalone, Publicly Traded REIT To Be Called Xenia Hotels & Resorts
August 11, 2014
Inland American Real Estate Trust Inc. is planning to spin off a significant portion of Inland American’s lodging portfolio into a standalone, publicly traded company to be called Xenia Hotels & Resorts Inc.
With a portfolio of 46 hotels comprising 12,636 rooms across 19 states, Xenia intends to apply to list its shares of common stock on the New York Stock Exchange. Xenia Hotels & Resorts was formerly known as Inland American Lodging Group Inc.
Upon completion of the proposed spin-off, Xenia will be a self-managed REIT based in Orlando, Florida focused solely on the lodging sector.
Xenia will own and continue to invest primarily in premium full service, lifestyle and urban upscale hotels in the top 25 U.S. lodging markets and key leisure destinations throughout the United States, with a particular focus on urban and densely populated suburban markets with multiple demand generators and high barriers to entry. The company’s portfolio will include premium brands such as Marriott, Hilton, Hyatt, Starwood, Kimpton, Aston, Fairmont and Loews.
“Over the past 18 months, Inland American has been implementing its long-term strategy of focusing our portfolio into three asset classes - lodging, multi-tenant retail and student housing,” said Thomas P. McGuinness, President of Inland American. “By doing so, we believed we would enhance long-term stockholder value and position Inland American to explore various strategic alternatives designed to provide liquidity events for our stockholders. We believe the potential spin-off is an important and significant step toward achieving these goals.”
Xenia will continue to be led by Marcel Verbaas, its president and CEO.
“We believe that the current market environment presents attractive opportunities for us to acquire additional hotels with significant upside potential that are compatible with our investment strategy,” Verbaas said. “We intend to enhance the value of our existing hotels through focused asset management and targeted renovation projects.”
“As a pure play lodging company, we believe we will be well-positioned to grow our business through operational flexibility, efficient deployment of resources and quick decision-making based solely on the needs of our business,” he added. “As a publicly-traded REIT, we will have direct access to the capital markets to issue equity or debt securities, and will have the flexibility to create a more diverse capital structure tailored to our strategic goals.”
Inland American is also currently marketing for sale their remaining suburban select service hotels that are currently overseen by the Xenia team. More information will be provided if a transaction is executed.
The completion of the spin-off will be subject to completion of a review by the SEC, NYSE listing authorization and final approval of the Inland American board of directors, who will determine whether it is in the best interests of Inland American.