Inland American Intends to Spin Off its Lodging Subsidiary
Monday August 11th, 2014 - 10:38AM H
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OAK BROOK, IL—Inland American Real Estate Trust, Inc. has filed a preliminary registration statement on Form 10 with the Securities and Exchange Commission outlining the details of a potential plan to spin off a significant portion of Inland American’s lodging portfolio into a standalone, publicly traded company to be called Xenia Hotels & Resorts, Inc. Xenia intends to list its shares of common stock on the New York Stock Exchange under the symbol “XHR.” Xenia Hotels & Resorts, Inc. was formerly known as Inland American Lodging Group, Inc.
Upon completion of the proposed spin-off, Xenia will be a self-managed REIT headquartered in Orlando, focused 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. According to the company, Xenia plans to own and continue to invest primarily in premium, full-service, lifestyle and urban upscale hotels in the top 25 U.S. lodging markets and key leisure destinations throughout the United States, with a focus 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.
Xenia will continue to be led by Marcel Verbaas, its president and CEO and a member of Xenia’s board of directors. Since 2007, Verbaas and his team have managed the lodging assets for Inland American and have overseen the acquisition of more than 50 hotels, including all but two properties that will be part of Xenia’s initial portfolio, according to the company.
“We are pleased to announce our intent to spin off Xenia Hotels & Resorts as a standalone, publicly traded company,” stated Thomas P. McGuinness, president of Inland American. “Over the past 18 months, Inland American has been implementing its long-term strategy of focusing our portfolio into 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. We believe the potential spin-off is an important and significant step toward achieving these goals.”
Inland American is also currently marketing for sale their remaining suburban select-service hotels that are currently overseen by the Xenia team. More information will be provided if a transaction is executed.
The company anticipates that the transaction will be effectuated by means of a pro rata distribution by Inland American of a specified percentage of the outstanding shares of Xenia common stock. This will occur on a distribution date to be set by the company’s board of directors in the future by way of a taxable pro rata special dividend to Inland American stockholders of record on the record date of the distribution. 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.
Tags: Inland American Real Estate Trust Inc. • Inland American Lodging Group Inc. • Xenia Hotels & Resorts Inc. • Marcel Verbaas • Thomas P. McGuinness • Hospitality • Ownership •
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