Real estate investment trust Xenia Hotels & Resorts has completed the sale of the Fairmont Dallas hotel in the US for $111m.
The sale price of the 545-room hotel is based on an 8.6× multiple and a 10% capitalisation rate on the hotel’s EBITDA and net operating income for the year ending 28 February 2025.
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These figures do not include an estimated $80m in anticipated near-term capital expenditures.
The net proceeds from the sale of the property are earmarked for general corporate purposes.
These may encompass repaying debts, acquiring properties that align with the company’s strategic vision, or repurchasing shares under the existing authorisation.
Established in 1969, the Fairmont Dallas was acquired by Xenia in 2011 for $69m.
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By GlobalDataXenia Hotels & Resorts chair and CEO Marcel Verbaas said: “The unlevered IRR during our ownership period is 11.3%, which is an excellent outcome for this investment, particularly given the pandemic’s significant negative impact on cash flows during 2020 and 2021. The disposition reflects our ongoing focus on upgrading the quality of the portfolio, prudent capital allocation, and maintaining balance sheet strength and flexibility.
“Because of the property’s significant and disruptive near-term capital needs as well as the expected impact on the market from the upcoming redevelopment of the Dallas Convention Center, we believe that this sale and the avoidance of the significant additional capital investment is a superior outcome for the company relative to continued ownership and re-investment.
“Additionally, the transaction has increased the overall quality of our portfolio, as Fairmont Dallas’ historical RevPAR and EBITDA/key trailed meaningfully below our portfolio averages.”
The self-advised and self-administered Xenia focuses on investing in luxury and upper-upscale hotels and resorts.
The company’s portfolio includes 30 hotels with a total of 8,868 rooms across 14 states in the US.
Xenia’s properties are managed or licensed by industry leaders, including Fairmont, Hilton, Hyatt, Kimpton, Loews, Marriott, and The Kessler Collection.
In May 2024, Xenia announced an increase in net income for the first quarter, with earnings of $8.53m, up 35.9% from $6.28m in the same period in 2023.
