NEW YORK--(BUSINESS WIRE)--Xenia Hotels & Resorts (NYSE: XHR), a publicly traded lodging REIT, has an opportunity to provide a significant special dividend to shareholders from proceeds of upcoming hotel sales, ensuring investor choice in how to reinvest the proceeds at this late stage of the hotel cycle, according to a report issued today by hospitality union UNITE HERE.
According to the UNITE HERE report, Xenia is reportedly seeking a buyer for its seven Kimpton hotels for a potential sale price of $500 million. It also reportedly has sold the Marriott Griffin Gate in Lexington, Kentucky, and put two additional hotels on the market. Total proceeds to Xenia could reach $800 million based on reported asking prices.
Shareholders can reap a high special dividend from these sale proceeds. For example, if Xenia uses fifty percent of the proceeds of the Kimpton portfolio to repay possible debt associated with these properties and distributes $250 million to investors, investors could reap an immediate 10% special distribution. Xenia may be in a position to distribute that much or even more.
A special dividend from these sales would preserve investor choice at a key moment in the hotel cycle. Investors would have the choice to reinvest the special dividends according to their confidence or doubt in Xenia’s future stock performance as the hotel cycle shows “signs of petering out.”i Xenia has not faced a cyclical downturn in hotels as a publicly traded company.
Since its public listing, Xenia has recycled the capital from previous sale proceeds to purchase luxury and upper upscale properties. With a potential shift in the hotel cycle on the horizon and its substantially repositioned portfolio, now is the time for Xenia to reevaluate its use of sale proceeds.
As the hotel cycle wanes, UNITE HERE believes investors are best positioned to decide for themselves whether to reinvest the proceeds of selling hotels into other hotels or into a less cyclical industry.
Read the full report: https://www.hotelcorpgov.org/wp-content/uploads/Xenia-Report.pdf
UNITE HERE is the union of hospitality employees throughout North America. Representing more than 300,000 employees, its members are beneficiaries of pension funds with over $60 billion in assets. UNITE HERE is a member of the Council of Institutional Investors and a Xenia Hotels & Resorts shareholder. UNITE HERE has a long record of advocating for strong corporate governance measures in hospitality companies.
i Fung, Esther, The Wall Street Journal, “Long Hotel Rally Losing Steam as Supply Swells, Business Travel Falls,” Page 2, Published 09/10/2019