Xenia Invests $305M in 2 AZ Hotels
- Oct 06, 2017
Xenia Hotels & Resorts acquired Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch in Scottsdale, Ariz., and Royal Palms Resort & Spa in Phoenix for $305 million, or $498,350 per key. The company purchased the two properties from affiliates of Hyatt Hotels Corp. Both hotels will continue to be managed by Hyatt. The company is now managing eight properties for Xenia, including the Hyatt Regency Grand Cypress, an 815-key hotel in Orlando, Fla., which Xenia also purchased from an affiliate of Hyatt Hotels Corp.
“The acquisition of Hyatt Regency Scottsdale and Royal Palms demonstrates our continued effort to invest in high-quality, uniquely positioned, premium full-service and lifestyle hotels in top lodging markets,” said Marcel Verbaas, president & CEO of Xenia, in prepared remarks. “We are thrilled to have been able to add two terrific hotels in one of our target markets that benefits from many diverse demand generators.”
The acquisition was funded with a combination of cash available on the Xenia’s balance sheet, a $100 million mortgage loan and a $125 million senior unsecured term loan. The new mortgage loan is collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center, which matures in August 2024. The term loan also includes an accordion option that allows the company to request additional lender commitments up to $125 million.
Growing hotel market
The 493-key Hyatt Regency features 70,000 square feet of meeting space, a 2.5-acre resort pool, eight food and beverage outlets, four tennis courts, Spa Avania and access to 27 holes of golf. The 119-key Royal Palms, part of the Unbound Collection by Hyatt, offers guests 20,000 square feet of meeting space, Mediterranean restaurant T. Cook’s, The Mix Up Bar and the Alvadora Spa.
“While the hotels are in good physical condition and have strong in-place cash flows, we believe we will be able to drive further growth as we work with Hyatt to continue to optimize operations, reap the benefits of the recent branding of Royal Palms and make targeted capital improvements to further upgrade both properties,” added Verbaas, in a prepared statement. “The market boasts relatively low supply growth over the next several years and the combination of these two hotels, each of which are focused on different segments within the overall lodging market, positions us well to take advantage of all the unique demand drivers of the Scottsdale area.”
The Scottsdale/Paradise Valley market is the top performing tract in the Greater Phoenix region due to its national and international recognition as a top meeting and resort destination. Downtown Scottsdale is home to acclaimed dining, entertainment and nightlife, while being only minutes from mountain ranges and outdoor activities.
Images courtesy of Xenia Hotels & Resorts