ORLANDO, Florida—Fresh off its spinoff from Inland American Real Estate Trust, Xenia Hotels & Resorts plans to dive into the transaction markets of the top 25 markets in the United States.
Xenia completed the spinoff earlier this month and went public on 4 February. The company’s stock was up by 1.2% as of 16 February. By comparison, the Baird/STR Hotel Stock Index was up by 4.2% over the same period.
Moving forward, Inland American will seek to deliver value by continuing to concentrate on its student housing and multi-tenant retail platforms, according to a news release.
Marcel Verbaas, Xenia’s director, president and CEO, told Hotel News Now the company’s focus will be on the top 25 U.S. leisure markets in the U.S. In these markets, the company will pursue premium-branded full-service, lifestyle, and urban and upscale properties.
“We’re looking for the right type of asset in the right location,” Verbaas said.
The real estate investment trust already has 46 open hotels, representing 12,636 rooms, in its portfolio and two properties under development. While Xenia has some properties under development, that method of growth won’t be a major factor for the REIT. Verbaas said Xenia wants to take advantage of the relatively positive transaction market.
“We have a strong investment team that has frankly done a good job of shaping the portfolio into what it is today,” he said. “We have a strong relationship with potential sellers.
“From our perspective, we are very well-positioned to find the right type of acquisition. There is a wide range of potential acquisition possibilities.”
The REIT is bumping into other investors seeking assets, Verbaas said. One point of differentiation between Xenia and its competition, however, is that the REIT is not laser-focused on the top seven U.S. hotel markets.
“There’s always competition for deals,” he said. “It’d be great to go after properties and be the only bidder for those properties. We’ve prided ourselves on finding the best opportunities. Not only do we have strong relationships in the brokerage community, like our peers do as well, but we can also build a good (deal) pipeline.”
Right time for IPO
In discussing the company’s initial public offering, Verbaas said Inland American’s board determined this was the optimal time for Xenia to go forward as a public company.
“We just felt at this time with where we are in the cycle” it was the best time for an IPO, he said. “And it provides liquidity for Inland American shareholders. It was a good time to do the transaction.”
Verbaas indicated he is bullish over where he sees the hotel industry headed.
“Supply growth is still muted,” he said. “We think we’re in a spot where economic growth has accelerated and we think we are in a good spot in the cycle.”
Dealmakers within the company will be strategic when it comes to transacting, Verbaas said.
“Obviously, we’re keeping a close eye on our markets and segments,” he said. “We have a good idea of where the markets are heading. I think we’ve anticipated pretty well where the growth will be in the cycle over the next few years.”
One potential threat to industry performance could be upheaval in the overall economy as it relates to major macro events, he said. “It’s more the things you can’t control,” Verbaas said.