Xenia Hotels & Resorts (NYSE: XHR) has an opportunity to provide a significant special dividend to shareholders from proceeds of upcoming hotel sales. Xenia is reportedly seeking a buyer for its seven Kimpton hotels for a potential sale price of $500 million. It also reportedly has sold the Marriott Griffin Gate in Lexington, Kentucky, and put two additional hotels on the market. Total proceeds to Xenia could reach $800 million based on reported asking prices.
Shareholders can reap a high special dividend from these sale proceeds. For example, if Xenia uses fifty percent of the proceeds of the Kimpton portfolio to repay possible debt associated with these properties and distributes $250 million to investors, investors could reap an immediate 10% special distribution. Xenia may be in a position to distribute that much or even more.
With a potential shift in the hotel cycle on the horizon and its substantially repositioned portfolio, now is the time for Xenia to reevaluate its use of sale proceeds. As the hotel cycle wanes, UNITE HERE believes investors are best positioned to decide for themselves how to reinvest the proceeds.