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Xenia Hotels acquires hotels in Arizona, Virginia for $410M

Xenia Hotels & Resorts Inc. acquired two Arizona hotels from Hyatt Hotels Corp. for $305 million and paid $105 million for a Virginia hotel.

In Arizona, Xenia acquired the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch, a 493-room upper-upscale resort in Scottsdale, and the 119-room Royal Palms Resort and Spa luxury resort in Phoenix. In Virginia, the company purchased the 365-room Ritz-Carlton Pentagon City in Arlington.

Xenia funded the purchase of the Arizona hotels with cash, a new $100 million mortgage loan and a new $125 million senior unsecured term loan.

The mortgage loan, which is collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center, matures in August 2024 and bears an interest rate of London Interbank Offered Rate plus 210 basis points. The new term loan matures in September 2024 and bears an interest rate based on a pricing grid with a range of 170 to 255 basis points plus LIBOR, determined by the company's leverage ratio. The term loan includes an accordion feature that allows additional lender commitments of up to $125 million.

The Arizona hotels' combined purchase price of $498,350 per key represents an estimated 12.6x multiple on projected 2017 EBITDA. The Royal Palms, which is part of The Unbound Collection by Hyatt, includes 20,000 square feet of meeting space, and the Hyatt Regency Scottsdale includes 70,000 square feet of meeting space.

Xenia funded the purchase of the Ritz-Carlton with cash and its senior unsecured credit facility. The $287,670-per-key purchase price represents an 11.3x multiple on the hotel's forecast 2017 EBITDA. The hotel offers 19,000 square feet of meeting space and recently underwent an $11 million renovation. It is connected to The Fashion Centre at Pentagon City, an 870,000-square-foot mall.