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REA
November 13, 2019  

REIT Shops High-End Atlanta, Austin Hotels

Xenia Hotels & Resorts is looking for buyers for two upper-upscale hotels, in the Atlanta and Austin markets, with a combined valuation of $275 million.

The 522-room Renaissance Atlanta Waverly Hotel & Convention Center is expected to fetch bids of roughly $150 million, or $287,000/room. The 492-room Renaissance Austin Hotel is valued at about $125 million, or $254,000/room. Market pros said those prices would translate to capitalization rates in the vicinity of 8.5%.

The properties are being offered subject to management contracts with Marriott International of Bethesda, Md. Eastdil Secured has the separate listings.

Xenia, an Orlando REIT, is selectively selling off holdings. Chief executive Marcel Verbaas told analysts in an earnings call last week that it’s looking to unload hotels that aren’t a strategic fit, are in need of renovations, or would generate more value from a sale than a long-term hold.

In addition to the Renaissance hotels, Xenia is shopping a 1,124-room package of seven properties valued at roughly $500 million. Currently branded as Kimpton hotels, they are available unencumbered by brand or management contracts. They’re scattered across the country, in Alexandria, Va., Chicago, Denver, Philadelphia, Portland, Ore., Salt Lake City, and Santa Barbara, Calif. Newmark has the listing.

Meanwhile, Xenia has struck a deal to sell the 409-room Marriott Griffin Gate Resort & Spa in Lexington, Ky., for just over $50 million to an unknown buyer. Xenia acquired Griffin Gate along with the two Renaissance hotels from another REIT, DiamondRock Hospitality of Bethesda, Md., in 2012 for a combined $262.5 million.

Financials for the Atlanta and Austin Renaissance properties were unavailable. Revenues for upper-upscale hotels in Atlanta were up a healthy 7.3% in the first nine months of the year compared to the same period last year, according to STR. That’s because room rates grew 6.2%, to $164.97, and occupancy ticked up almost a full percentage point to 77.2%. Upper-upscale hotels in Austin saw a 6.1% year-over-year increase in revenue for January through September, to $154.03/room. Rates were up 4% to an average of $203.05/room, and occupancy rose 1.6 percentage points to 75.9%.

The Renaissance Atlanta Waverly is at 2450 Galleria Parkway, 13 miles northwest of downtown. It’s adjacent to the Cobb Galleria Centre convention facility. The hotel underwent some renovations in 2013. It has 66,000 square feet of event and meeting space.

The Renaissance Austin Hotel is at 9721 Arboretum Boulevard, 10 miles north of downtown in an area dense with shops, restaurants and residences. It has 70,000 sf of meeting space.

Both hotels have amenities such as outdoor pools, fitness centers, spas, restaurants and bars.