Dealmaker: Xenia Hotels & Resorts Acquires Three Properties for $410M
Xenia Hotels & Resorts, Orlando, Fla., acquired three resorts and hotels in Arizona and Virginia for $410 million.
In Arizona, the real estate investment trust purchased the 493-room Regency Scottsdale Resort & Spa at Gainey Ranch in Scottsdale and Royal Palms Resort & Spa, a 119-room resort in Phoenix. Hyatt Hotels Corp., Chicago, sold both properties for $305 million, or nearly $500,000 per key. Hyatt will continue to manage both assets.
Xenia President and CEO Marcel Verbaas said the Scottsdale-area market has relatively low expected supply growth over the next several years, “and the combination of these two hotels, each of which are focused on different segments within the overall lodging market, positions us well to take advantage of all the unique demand drivers of the Scottsdale area.”
The Scottsdale/Paradise Valley market is the top-performing hotel submarket in greater Phoenix.
Xenia funded the acquisitions using balance sheet cash, a new $100 million mortgage and a new $125 million senior unsecured term loan. The new seven-year mortgage was collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center and bears interest at LIBOR plus 210 basis points. The new term loan also matures in 2024 and bears an interest rate in a range between 170 and 255 basis points above LIBOR based on the company’s borrowing. The current effective interest rate is LIBOR plus 170 basis points. The term loan also included an accordion option that will allow Xenia to request additional lender commitments up to $125 million.
Xenia also acquired the Ritz-Carlton Pentagon City, a 365-room Arlington, Va., hotel for $105 million, or $287,700 per key. The firm used balance sheet cash and its senior unsecured credit facility to fund the purchase.
The 18-story hotel has 365 rooms and 19,000 square feet of meeting space directly connected to The Fashion Centre at Pentagon City, a mixed-use facility with 870,000 square feet of retail and restaurant space and a 170,000-square-feet office tower. The mall recently underwent a $90 million renovation and 52,000-square-foot expansion.
Verbaas noted the purchase allowed Xenia to increase its concentration in the luxury and upper-upscale segments.
Arlington is one of the top-performing submarkets in the Washington, D.C. area due to its location close to major government institutions, 40-million-plus-square-feet of office space and transportation hubs such as Ronald Reagan National Airport and the region’s Metro public transit system.
