Orlando, Florida-based Xenia Hotels & Resorts Inc. (NYSE: XHR) sold one of its four Houston-area hotels as part of a larger deal.
Homewood Suites by Hilton Houston Near the Galleria, a 162-room extended-stay hotel at 2950 Sage Road, and three other hotels in St. Louis, Denver and Chicago were sold to an undisclosed buyer for about $119 million. Xenia also retained about $1.5 million in capital reserve funds related to the properties.
The properties were non-core assets with projected revenue per available room (RevPAR) and earnings per key that were expected to significantly lag the rest of the company’s portfolio, Xenia President and CEO Marcel Verbaas said in a press release.
"While we remain bullish on the long-term prospects of our remaining higher-quality hotels in Houston, Denver and Chicago, the sale of these select service assets allowed us to reduce our overall exposure in these markets,” Verbaas said in the release.
Xenia’s remaining Houston-area portfolio is composed of:
Westin Galleria Houston, 487 rooms
Westin Oaks Houston at The Galleria, 406 rooms
Marriott Woodlands Waterway Hotel & Convention Center, 343 rooms
On average, Xenia’s Houston-area hotels saw RevPAR decrease 24.5 percent year over year in the third quarter, according to a U.S. Securities and Exchange filing. Much of that was driven by an 11.5 percent decrease in the portfolio’s average daily rate and a decrease in occupancy. Companywide, Xenia reported room revenues decreased by $8.8 million, or 5 percent, in the third quarter and attributed $4.2 million of that to its Houston-area hotels.
Other hotels sold in the $119 million deal were:
Hampton Inn & Suites Denver Downtown, 148 rooms
Hilton Garden Inn Chicago North Shore / Evanston, 178 rooms
Hilton St. Louis Downtown, 195 rooms
With the sale of the St. Louis hotel, Xenia exits that market. The company will use proceeds from the deal for general corporate purposes, which could include debt repayment, potential acquisitions and share repurchases.
Nationwide, Xenia lists 46 properties on its website, including the four hotels sold.