GARDEN GROVE, CA—Xenia Hotels & Resorts Inc. has sold the 656-room Hyatt Regency Orange County here for $137 million. The buyer was not disclosed, and requests for this information were not revealed to GlobeSt.com before deadline.
The sale price of the hotel represents an 11.8x multiple on its 2015 forecast EBITDA and a 7.1% capitalization rate on 2015 forecast NOI. In addition to the purchase price, the company retained the approximately $5.9-million balance in the hotel's capital-expenditure reserve account.
According to Marcel Verbaas, president and CEO of Xenia Hotels & Resorts, “This transaction allowed us to take advantage of the private market valuation for a legacy hotel in our portfolio that we expected to deliver below-average growth as an additional supply is entering this competitive and relative low-rated market. Given the market's dynamics and the hotel's position, we concluded that near-term capital requirements would not represent a prudent additional investment for the company. This disposition is another step in our evolution, since it further exemplifies our ability to enhance our portfolio through disciplined acquisitions and dispositions and thoughtful capital allocation.”
The property achieved RevPAR of $115.92 through the six months ending June 30, approximately 19% below the company's portfolio RevPAR of $142.44 during that same period. As a result of the sale, the company's projected 2015 adjusted EBITDA will be reduced by approximately $1.9 million. Excess proceeds from the disposition after repayment of the $62-million mortgage loan secured by the hotel will be utilized to pay off the $73-million mortgage loan security by the company's Marriott Woodlands Waterway Hotel & Convention Center. Eastdil Secured represented the company on the transaction.
Renovations on the hotel had been done previously by R.D. Olson Construction, completed approximately September 2010.
As GlobeSt.com reported previously, earlier this year Xenia had purchased $245 million worth of hotels. The firm acquired fee simple interests in three high-quality lifestyle boutique hotels. The company funded the acquisitions with cash and its line of credit.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
