CHICAGO--(BUSINESS WIRE)--Xenia Hotels & Resorts [NYSE: XHR] is being spun off of Inland American Real Estate Trust early next month. A new report by UNITE HERE takes a critical look at Inland American’s hotel buying binge and the proposed transaction. Xenia’s public filings describe the spin-off as a liquidity event by Inland American for its approximately 180,000 investors.
With so many potential sellers and a growth strategy that diverges from its publicly-traded peers, we pose the following questions:
- Is Inland American setting up retail investors to take a bath?
- How much volatility and price pressure can Xenia’s stock handle?
- Why is there no sign yet that Xenia is being underwritten by investment banks?
- Will institutional investors wait to buy?
- When will hedge funds see value?
- Will Xenia be vulnerable to shorting?
“The hotel REIT space is crowded. Xenia’s risk profile reads pent-up demand to sell, low liquidity, and trading price volatility. Its CEO and corporate culture derive from Inland American, where estimated share value dropped 30% and Inland affiliates charged investors $1.4 billion in related-party fees. We question why Xenia is pursuing a spin-off that appears to lack a key component of success: underwriting,” said Mike French, research analyst at UNITE HERE.