OAK BROOK, ILL. — Inland American Real Estate Trust Inc. has announced its plan to spin off a significant portion of its lodging portfolio into a standalone, publicly traded company to be called Xenia Hotels & Resorts Inc. The new real estate investment trust (REIT) intends to list its shares of common stock on the New York Stock Exchange (NYSE) under the symbol “XHR.” Xenia Hotels & Resorts was formerly known as Inland American Lodging Group Inc.
Upon completion of the proposed spin-off, Xenia will be headquartered in Orlando, Fla., and focus solely on the lodging sector. It is expected to own 46 hotels, comprising 12,636 rooms, across 19 states and the District of Columbia, and a majority interest in two hotels under development.
Xenia will own and continue to invest primarily in premium full-service, lifestyle and urban upscale hotels in the top 25 U.S. lodging markets throughout the United States, focusing on urban and densely populated suburban markets with multiple demand generators and high barriers to entry. The company’s portfolio will include premium brands such as Marriott, Hilton, Hyatt, Starwood, Kimpton, Aston, Fairmont and Loews.
“We are pleased to announce our intent to spin off Xenia Hotels & Resorts as a standalone, publicly traded company,” says Thomas McGuinness, president of Inland American. “Over the past 18 months, Inland American has been implementing its long-term strategy of focusing our portfolio [on] 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.”
Xenia will continue to be led by Marcel Verbaas, its president and CEO and a member of Xenia’s board of directors. Verbaas and his senior management team have an average tenure in the lodging industry of 26 years.
“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,” says Verbaas.
Inland American is also currently marketing for sale its remaining suburban select service hotels that are currently overseen by the Xenia team.
Transaction Details
Each Inland American stockholder will be entitled to receive a to-be-determined number of shares of Xenia common stock for a to-be-determined number of shares of Inland American common stock held by each stockholder at the close of business on the record date of the distribution. Inland American currently expects the spin-off to be completed in the next four to eight months.
Following the distribution, Inland American stockholders will own shares of common stock in both Inland American and Xenia. The number of Inland American shares held by stockholders will not change as a result of this distribution of Xenia stock. Inland American’s shares will not be listed on a national securities exchange as part of the spin-off.
The completion of the spin-off will be subject to completion of a review by the SEC of the Form 10 filed by Inland American, NYSE listing authorization and final approval of the Inland American board of directors.
Goldman, Sachs & Co. and Morgan Stanley & Co. LLC are acting as financial advisors to Inland American in relation to the spin-off, and Latham & Watkins LLP is acting as legal counsel to Inland American.
As of March 31, 2014, Inland American owned 281 properties, representing approximately 24 million square feet of retail, industrial and office properties, 8,286 student housing beds and 20,093 hotel rooms.
— John Nelson