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Latest News - October 2014

October 20, 2014
"Lots of Sellers, Who Will Buy Xenia Hotels?", Asks UNITE HERE of Inland American spin-off

CHICAGO — Xenia Hotels & Resorts [NYSE pending: XHR] is being spun-off of Inland American Real Estate Trust without key components of most hotel IPO’s, according to a new report by UNITE HERE. Xenia’s public filings describe the spin-off as a liquidity event by Inland American for its 183,000 investors.

The new report raises concerns that Xenia may lack an underwriter for its share listing and does not appear to have included institutional investors as part of the spin-off. Most hotel IPO’s are underwritten by investment banks and happen concurrently with the sale of shares to institutional investors, who provide trading stability in the public markets, according to UNITE HERE.

In contrast to Xenia, UNITE HERE’s report documents the variety of underwriters and share offerings to institutional investors in hotel IPOs in the last decade, and asks:

  • Is Inland American setting up retail investors to take a bath?
  • How much volatility and price pressure can Xenia’s stock handle?
  • Will Xenia be underwritten by investment banks?
  • Will institutional investors wait to buy?
  • Will Xenia be vulnerable to shorting?

“Inland American’s estimated share value has dropped 30%, Inland affiliates have charged investors $1.4 billion in related-party fees, and Xenia is pursuing a spin-off that may lack a key component of success: underwriting,” said Mike French, UNITE HERE Research Analyst. “Prospective investors and current shareholders should look closely at this transaction.”



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