Xenia Hotels & Resorts Inc. has sold the 545-room Fairmont Dallas for $111 million, or approximately $203,670 per key.
The transaction price represents an 8.6x multiple and a 10% capitalization rate on the property’s hotel EBITDA and net operating income for the 12 months ended Feb. 28, respectively. These transaction price metrics are exclusive of an estimated $80 million of near-term capital expenditures. The company expected the property would have earned approximately $8 million of hotel EBITDA for the remainder of this year.
“We are pleased to have completed the sale of Fairmont Dallas, which opened in 1969 and which we acquired in 2011 for $69 million,” said Marcel Verbaas, chair/CEO, Xenia. “The unlevered IRR during our ownership period is 11.3%, which is an excellent outcome for this investment, particularly given the pandemic’s significant negative impact on cash flows during 2020 and 2021. The disposition reflects our ongoing focus on upgrading the quality of the portfolio, prudent capital allocation and maintaining balance sheet strength and flexibility. Because of the property’s significant and disruptive near-term capital needs as well as the expected impact on the market from the upcoming redevelopment of the Dallas Convention Center, we believe that this sale and the avoidance of the significant additional capital investment is a superior outcome for the company relative to continued ownership and re-investment. Additionally, the transaction has increased the overall quality of our portfolio, as Fairmont Dallas’ historical RevPAR and EBITDA/key trailed meaningfully below our portfolio averages.”