Dive Brief:
- Xenia Hotels & Resorts sold the 545-room Fairmont Dallas for $111 million, or approximately $203,670 per key, the real estate investment trust announced in a Friday release. The buyer was undisclosed, and Xenia could not be reached for comment.
- Xenia acquired the Fairmont Dallas in 2011 for $69 million. Located in the city’s arts district, the hotel offers multiple dining options, a Junior Olympics-sized swimming pool, a fitness center and a gift shop.
- The sale aligns with Xenia’s strategy to “maintain balance sheet strength and flexibility” as the Texas hotel approaches “significant and disruptive near-term capital needs” as well as other market challenges, CEO Marcel Verbaas said in a statement.
Dive Insight:
While Fairmont Dallas provided “excellent” returns for Xenia — particularly in light of “the pandemic’s significant negative impact on cash flows during 2020 and 2021” — several hurdles make now a desirable time to sell, Verbaas explained in the release.
The sale will help Xenia avoid “significant additional capital investment” that is needed to maintain the property as well as market disruptions caused by the upcoming redevelopment of the Dallas Convention Center, according to Verbaas.
Despite the Dallas market experiencing robust hotel demand in recent years, per local experts, Verbaas shared that Fairmont Dallas’ historical RevPAR and EBITDA per key has “trailed meaningfully below” the REIT’s portfolio averages.
Real estate investment services firm Matthews reported that in the third quarter of 2024, Dallas RevPAR was down 3.6% year over year, and occupancy was struggling to recover given increased supply over the last five years.
Xenia still owns the Marriott Dallas Downtown, according to the REIT’s website. In total, the company owns 30 upper upscale and luxury hotels, comprising 8,868 rooms across 14 states.
Proceeds from the Fairmont sale could be used for debt repayment, future acquisitions or share repurchases, Xenia detailed in the release. In the last six months, the company also sold the 107-room Lorien Hotel & Spa in Alexandria, Virginia, for $30 million, per a February earnings report.
