8-K - XHR - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 31, 2020

Xenia Hotels & Resorts, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	001-36594	20-0141677
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 S. Orange Avenue

Suite 2700

Orlando

Florida

32801

(Address of Principal Executive Offices)

(

407

)

246-8100

(Registrant’s Telephone Number, Including Area Code)

N/A (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	XHR	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 8.01. Other Events.

On March 31, 2020, Xenia Hotels & Resorts, Inc. (the "Company") announced that, due to the effects of the COVID-19 pandemic, it had temporarily suspended operations or is in the process of temporarily suspending operations at 24 of its 39 hotel properties. The remainder of the Company’s properties are currently operating at reduced levels; however, the Company may temporarily suspend the operations at additional hotels in the future as a result of the COVID-19 pandemic.

The following risk factor supplements the risk factor disclosure contained in Part I, Item IA of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 25, 2020.

The effects of the ongoing COVID-19 pandemic on our operations and financial performance could be long-lasting and severe and based on current conditions is expected to have a material adverse effect on our business, results of operations, cash flows and financial condition.

The recent outbreak of the novel coronavirus and related respiratory disease (“COVID-19”) throughout the world, classified by the World Health Organization as a pandemic, has reached more than 160 countries and is a rapidly evolving situation. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. As a result, the pandemic has significantly disrupted global travel and supply chains, and has adversely impacted global commercial activity across many industries, including in particular the travel, group meeting and conference, lodging and hospitality industries. The COVID-19 pandemic has had, and is expected to continue to have, significant adverse impacts on economic and market conditions and global economic contraction. The rapid development and fluidity of pandemic situations precludes any prediction as to the scale and scope of the ultimate adverse impact and longevity of the COVID-19 pandemic or any future pandemic outbreak.

The effects of the COVID-19 pandemic on the hotel industry are unprecedented with global demand for lodging drastically reduced and occupancy levels reaching historic lows. By March 31, 2020, we had temporarily suspended operations or were in the process of temporarily suspending operations at 24 of our hotel properties, and the vast majority of our group business for April and May of 2020 has now been canceled. The remainder of the Company’s properties are currently operating at reduced levels; however, the Company may temporarily suspend the operations at additional hotels in the future as a result of the COVID-19 pandemic. It is not currently known when the operations at our hotel properties will resume, or if we will need to suspend operations at additional hotel properties. Furthermore, we cannot predict when business levels will return to normalized levels when the effects of the pandemic subside. There also can be no guarantee that the demand for lodging, and consumer confidence in travel generally, will recover as quickly as other industries. As a result, our revenues have declined significantly and we expect this trend to continue. Additionally, we expect the effects of the pandemic to materially adversely affect our ability to consummate acquisitions and dispositions of hotel properties as well as to cause us to scale back or delay planned renovations and other projects. Due to the speed with which the situation is developing we cannot predict the full extent and duration of the effects of the COVID-19 pandemic on our operations, although the longer and more severe the pandemic, the greater the material adverse effect on our business, results of operations, cash flows, financial condition, the market price of our common stock, our ability to make distributions to our shareholders, our access to credit markets and our ability to service our indebtedness.

Forward-Looking Statements

This Current Report on Form 8-K contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. These forward-looking statements relate to the suspension of operations at our hotel properties, our ability to consummate acquisition and disposition transactions, planned renovations and other projects, the local, national and global impact of the COVID-19 pandemic, and the impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information.

These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry, the effects of the COVID-19 pandemic, the speed of recovery of the lodging industry once the pandemic has subsided and other factors as are described in greater detail in the Company’s filings with the SEC, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release of Xenia Hotels & Resorts, Inc., dated March 31, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: March 31, 2020	By:	/s/ Atish Shah
	Name:	Atish Shah
	Title:	Executive Vice President and Chief Financial Officer

		Exhibit

FOR IMMEDIATE RELEASE

DATE: March 31, 2020

XENIA HOTELS & RESORTS PROVIDES BUSINESS UPDATE

Orlando, FL - March 31, 2020 - Xenia Hotels & Resorts, Inc. (NYSE: XHR) (“Xenia” or the “Company”) today provided an update on pending transactions, as well as an update on the impact of COVID-19 on its operations.

On February 24, 2020, Xenia announced that it had entered into an agreement to sell the 492-room Renaissance Austin Hotel for $100.5 million, with an anticipated closing date during the first quarter of 2020. Subsequent to the announcement, the parties entered into an amendment to the agreement that extended the closing until April 16, 2020 and authorized the release of the $2 million deposit held in escrow to the Company. At this time, the Company cannot provide assurances that the transaction will close as agreed upon, or at all.

On March 4, 2020, Xenia announced it had executed an agreement to sell a seven-hotel portfolio for $483 million. There is currently no change to the timing or terms of this transaction. The buyer continues to have a $20 million non-refundable deposit at risk should the transaction not proceed.

Also in the first quarter, the Company entered into an agreement to sell the 522-room Renaissance Atlanta Waverly Hotel & Convention Center for $155 million. The transaction was initially expected to close in March 2020, but the parties subsequently agreed to extend the closing until July 31, 2020. The buyer has a $7.75 million non-refundable deposit at risk should the transaction not proceed.

Based on the current status of the financial markets, and overall economic uncertainty, the Company can make no assurances that any of the three aforementioned transactions will close as agreed upon, or at all. If the transactions are not completed as a result of the respective buyer parties' default, the Company expects to receive the non-refundable deposits which are currently held in escrow.

Since the Company last issued an update on operating performance on March 11, 2020, the impact of the COVID-19 pandemic on its operations has increased significantly, with the vast majority of group business for April and May now having been canceled and both business transient and leisure demand declining significantly throughout the portfolio, consistent with trends throughout the U.S. lodging industry.

The Company’s operating partners have lowered hotel operating expenses, primarily by adjusting staffing levels in response to the significant reduction in demand. Specific actions vary by property, with a range that includes closure of restaurants, bars, amenities, floors, wings or the entire property. At present, 24 of the Company’s hotels and resorts have temporarily suspended operations or are in the process of temporarily suspending operations. The remainder of the Company’s properties are currently operating at reduced levels; however, the Company may temporarily suspend the operations at additional hotels in the future as a result of the COVID-19 pandemic.

In addition to the expense-reduction efforts undertaken at the properties, the Company expects to reduce its corporate full-year cash general and administrative expense by over 20%, or approximately $5 million, primarily resulting from lower executive incentive compensation, as well as a reduction in other costs. The Company will evaluate further expense reductions as appropriate.

With respect to capital expenditures, Xenia has reviewed its capital program for 2020 and is canceling or deferring approximately $50 million of capital expenditures, representing a 40% reduction. The Company’s current estimate for full-year capital expenditures is approximately $70 million. This estimate primarily reflects projects that are currently in-progress or for which materials have been ordered. Most of these expenditures relate to the transformative renovation of Park Hyatt Aviara Resort, Golf Club & Spa and the guestroom renovation at Marriott Woodlands Waterway Hotel & Convention Center. Each of these projects has been adjusted, in terms of timing or scope, to reduce 2020 capital outlays.

In order to bolster the Company's unrestricted cash position and to help meet its ongoing operational and financial obligations, the Company drew the remaining $340 million on its $500 million Senior Unsecured Revolving Credit Facility on March 17, 2020. The Company’s previously declared first quarter dividend will be paid on April 15, 2020 to shareholders of record as of March 31, 2020. Xenia expects to suspend its dividend through the balance of the year until it determines the required dividend amount to cover its taxable income for 2020.

“The impact of COVID-19 on the global and U.S. economy and the travel industry in particular has been unprecedented, causing a severe impact to our short-term operations,” commented Marcel Verbaas, Chairman and Chief Executive Officer of Xenia. “At this time, our immediate focus has been on the well-being and safety of our guests, our associates and our operators’ employees at our properties, as well as the financial strength of our company. I am proud of all the hard work by our associates and our operators’ employees during these difficult times. Our dedication to keeping our balance sheet in a strong position throughout the lodging cycle and our success in significantly increasing the appeal of our portfolio to many different sources of demand should benefit us as we navigate through the current health crisis and work to stabilize our operations when business levels start to return to normalized levels. With our experienced and dedicated management team, our strong liquidity position, our high-quality portfolio, and the strength of our operators and brand affiliations, we believe we are well-positioned to weather this storm.”

About Xenia Hotels & Resorts, Inc.

Xenia Hotels & Resorts, Inc. is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts, with a focus on the top 25 U.S. lodging markets as well as key leisure destinations in the United States. The Company owns 39 hotels comprising 11,245 rooms across 16 states. Xenia’s hotels are primarily in the luxury and upper upscale segments, and operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton, Fairmont, Loews, and Hilton, as well as leading independent management companies including The Kessler Collection and Sage Hospitality. For more information on Xenia’s business, refer to the Company website at www.xeniareit.com.

This press release contains statements as to the Company's beliefs and expectations of the outcome of future events that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Examples of these statements include, but are not limited to, statements regarding the status and outcome of certain asset sale transactions, the suspension of operations at our hotel properties, the anticipated impact of the COVID-19 pandemic on travel, transient and group demand, the anticipated impact of such pandemic on our results of operations, and the resulting amount of cancellation and attrition fees and cost-containment efforts. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties include, but are not limited to, the effects of the COVID-19 pandemic, including on the demand for travel, transient and group business (including, but not limited to, government-imposed travel or meeting restrictions), and levels of consumer confidence in the safety of travel as a result of the

pandemic; the length of the COVID-19 pandemic and severity of such pandemic in the United States; the pace of economic recovery and the recovering of consumer confidence following the COVID-19 pandemic; our ability to implement cost-containment strategies; and the adverse effects of the COVID-19 pandemic on our business or the market price of our common stock. Other factors that could cause results to differ are described in the filings made from time to time by the Company with the U.S. Securities and Exchange Commission and include the risk factors and other risks and uncertainties described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Except as required by law, the Company does not undertake any obligation to release publicly any revisions to forward-looking statements made by it to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events.

Contact:

Lisa Ramey, Vice President Finance, Xenia Hotels & Resorts, (407) 246-8111

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