Inland American Real Estate Trust (Inland American) plans to spin off its lodging portfolio in a standalone company that will become publicly traded.
The Non-traded REIT announced yesterday that it has filed a preliminary registration statement on Form 10 with the Securities and Exchange Commission (SEC). The filing reveals the company’s plans to create a standalone, publicly traded company called Xenia Hotels & Resorts, Inc, formerly Inland American Lodging Group, Inc. The company would be created from Inland American’s lodging portfolio and would list shares on the New York Stock Exchange with the symbol “XHR”.
Once the spinoff is complete, Xenia will be an Orlando-based, self-managed REIT.
With a focus on the lodging sector, the REIT is expected to own 46 hotels, totaling 12,636 rooms, across 19 states and the District of Columbia, as well as a majority interest in two hotels that are under development. Xenia will seek to invest in the top 25 lodging markets in the U.S. and continue to amass a portfolio of premium full service, lifestyle and urban upscale hotels. The company will have a particular focus on urban and densely populated suburban markets that have multiple demand generators and high barriers to entry and will include such premium brands as Marriott®, Hilton®, Hyatt®, Starwood®, and more.
“We are pleased to announce our intent to spin off Xenia Hotels & Resorts as a standalone, publicly traded company,” said Thomas P. McGuinness, President of Inland American. He continued, “Over the past 18 months, Inland American has been implementing its long-term strategy of focusing our portfolio into three asset classes – lodging, multi-tenant retail and student housing. By doing so, we believed we would enhance long-term stockholder value and position Inland American to explore various strategic alternatives designed to provide liquidity events for our stockholders. We believe the potential spin-off is an important and significant step toward achieving these goals.”
Marcel Verbaas will lead Xenia as its President and Chief Executive Officer and a member of Xenia’s board of directors. He and his team have managed Inland American’s lodging assets since 2007 and have overseen the acquisition of over 50 hotels, all but two of which will be part of Xenia’s initial portfolio. The senior management team, along with Mr. Verbaas, has an average tenure of 26 years in the lodging industry.
Mr. Verbaas commented, “Xenia Hotels & Resorts will have a premium collection of properties affiliated with some of the strongest brands in the lodging industry. These assets have performed well as part of Inland American’s portfolio, delivering strong cash flows and attractive returns, and as a standalone company, Xenia will have the additional strategic and financial flexibility to continue delivering growth and creating stockholder value.”
Once listed, Xenia hopes to provide internal growth through active and focused asset management of existing hotels, as well as external growth through acquisitions that meet its investment criteria. As a standalone company, Xenia intends to grow its business through operational flexibility, efficient deployment of resources and quick decision-making based solely on the needs of Xenia’s business. As a publicly traded REIT, it will also have direct access to the capital markets to issue equity or debt securities, and will have flexibility to create a diverse capital structure to suit its strategic goals.
Inland American expects the transaction will take the form of a pro rata distribution by Inland American of a specified percentage of the outstanding shares of Xenia common stock. Inland American stockholders will be entitled to receive a not-yet-determined number of shares of Xenia common stock for a not-yet-determined number of shares of Inland American common stock. Inland American expects the spinoff to be completed over the next four to eight months.