Hotel REIT Xenia Hotels & Resorts has sold the 545-room Fairmont Dallas for $111 million, which equates to approximately $203,670 per key. Other terms and conditions were not disclosed.
The Orlando-based company—which owns 30 hotels in the luxury and upper-upscale segments— owned the hotel since 2011. According to Xenia, the transaction price represents an 8.6 times multiple and a 10.0 percent capitalization rate on the property's hotel EBITDA and net operating income for the 12 months ended Feb. 28, respectively. These transaction price metrics are exclusive of an estimated $80 million of near-term capital expenditures, according to the company, which expected the Fairmont Dallas would have earned approximately $8 million of hotel EBITDA for the remainder of 2025.
"We are pleased to have completed the sale of Fairmont Dallas, which opened in 1969 and which we acquired in 2011 for $69 million," said Marcel Verbaas, chair and CEO of Xenia, in a statement. "The unlevered IRR during our ownership period is 11.3 percent, which is an excellent outcome for this investment, particularly given the pandemic's significant negative impact on cash flows during 2020 and 2021. The disposition reflects our ongoing focus on upgrading the quality of the portfolio, prudent capital allocation, and maintaining balance sheet strength and flexibility. Because of the property's significant and disruptive near-term capital needs as well as the expected impact on the market from the upcoming redevelopment of the Dallas Convention Center, we believe that this sale and the avoidance of the significant additional capital investment is a superior outcome for the company relative to continued ownership and re-investment. Additionally, the transaction has increased the overall quality of our portfolio, as Fairmont Dallas' historical RevPAR and EBITDA/key trailed meaningfully below our portfolio averages."
The buyer of the hotel was undisclosed. According to Xenia, net proceeds from the sale will be utilized for general corporate purposes, which may include debt repayments, potential acquisitions consistent with the company's strategy, and/or share repurchases under the company's existing authorization.