Xenia Hotels & Resorts, Inc.

Now I'd like to hand you over to Aldo Martinez, Manager of Finance, to begin. Please go ahead when you're ready.

Thank you, Carla. And welcome to Xenia Hotels and Resorts' first quarter 2025 earnings call and webcast. I'm here with Marcel Verbas, our Chair and Chief Executive Officer, Barry Bloom, our President and Chief Operating Officer, and Atish Shah, our Executive Vice President and Chief Financial Officer. Marcel will begin with a discussion on our performance and recent transactions. Barry will follow with more details on operating trends and capital expenditure projects. And Atish will conclude today's remarks on our balance sheet and outlook. We will then open the call for Q&A. Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued this morning, along with the comments on this call, are made only as of today, May 2, 2025, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find the reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in our first quarter earnings release, which is available on the investor relations section of our website. The property level information we'll be speaking about today is on the same property basis for all 31 hotels, unless specified otherwise. An archive of this call will be available on our website for 90 days. I will now turn it over to Marcel to get started.

Thanks, Olive. And good afternoon, everyone. We are pleased with our first quarter results, which gave us a strong start to the year. For the first quarter of 2025, we reported net income of $15.6 million, adjusted EBIT IRA of $72.9 million, and adjusted FFO per share of 51 cents. REFBAR grew by 6.3% as compared to the first quarter of 2024, which exceeded our expectations and led to nearly 12% growth in adjusted EBIT IRA and nearly 16% growth in adjusted FFO per share. First quarter same property RFR for our 31 hotel portfolio was $188.73, with occupancy increasing by 180 basis points and ADR increasing by 3.6% compared to the same period last year. The initial ramp up at Grand Hyatt Scottsdale, after the substantial completion of its transformative renovation, was a significant driver of this strong performance. However, the portfolio also benefited from meaningful ref bar growth in a number of our other markets, with one-third of our assets achieving double-digit percentage ref bar growth and several others achieving high single-digit percentage ref bar growth. There were several puts and takes that impacted our portfolio during the quarter. On the positive side of the ledger, our hotels in the Washington, D.C., and New Orleans markets benefited from the presidential inauguration and the Super Bowl in January and February, respectively. Also, March results were aided by the shift in the timing of the Easter holiday, which fell on March 31st in 2024, causing softness in demand during the last week of the month last year. Conversely, we also experienced a few headwinds during the first quarter. Most significantly, January results were negatively impacted by unusually strong winter storms in several of our Sunbelt locations, particularly in Texas. A common theme throughout the portfolio was the fact that strong group business and recovering demand from some of the largest corporate accounts drove Rothbard gains. This is a continuation of the trends we experienced in 2024 and consistent with our expectations as we started the year. We came into the year with very strong group revenue pace, and this was realized in the first quarter. On the same property basis, first quarter hotel EBITDA of $79.3 million was 10.5% above 2024 levels, and hotel EBITDA margin increased 42 basis points. We continue to be pleased with our operators' efforts to control expenses, as the impact of wage growth and other inflationary pressures continue to impact operating margins. On our last quarterly earnings call, we expressed our excitement about the substantial completion of the Grant Hyatt Scottsdale transformative renovation and up branding, including the significantly expanded and upgraded Arizona ballroom that opened to groups in mid-January. Customer feedback on the relaunch resource continues to be outstanding, and group production has been strong. REFR grew by approximately 60% during the first quarter compared to the same quarter last year, which was consistent with our expectations, despite overall transient demand in the Phoenix-Cottsdale market being a bit softer this year. Group revenue on the books for the remainder of the year has continued to grow, with our group revenue base for 2025 now exceeding group revenues actualized in 2019, our project underwriting base year. As of the end of the first quarter, over 80% of our expected group room revenue for the balance of the year was definite. We completed two transactions over the last two months that we believe reflect prudent capital allocation. In March, we took advantage of a unique opportunity to acquire the fee-simple interest in the land underlying our high-aggregancy from the City of Santa Clara. Through this $25 million purchase, we have improved our optionality and flexibility for this hotel and eliminated risk due to a potentially significant ground rent escalation in the near term. The ground lease provides for both percentage rent tied to revenues that could increase substantially over time, as well as a fair market value rent adjustment in the relatively near future. As for this transaction, we now own fee-simple interest in all but one of our hotels, and those have very limited exposure to ground lease expiration or rent escalation. On the disposition side, in April, we sold Fairmont Dallas for $111 million, avoiding a costly and disruptive near-term renovation and further improving the quality of the portfolio. We strongly believe that existing cash flow levels were not sustainable without a significant renovation. due to the deteriorating physical condition of this 56-year-old hotel, guest expectations for a luxury hotel, and the upcoming closing and renovation of the Dallas Convention Center, that we expected to negatively impact this group-focused hotel in the near and medium term. We estimate that near-term capital expenditures of approximately $80 million would have been required to maintain and improve the hotel's competitive positioning. This extensive potential renovation would have been highly disruptive to the hotel's operations and EBITDA and carried a significant amount of execution risk. With the amount of capital reinvestment that would have been required, the EBITDA disrupted during the renovation, and the expected time it would have taken to reach stabilization post-renovation, we believe that the sale of the hotel was a superior capital allocation decision for the company. The Fairmont Dallas investment was a very successful one. We acquired the hotel for $69 million in 2011. The hotel generated strong cashflow during most of our period of ownership, which in combination with our net sale proceeds resulted in an unlevered IRR of 11.3% for his investment. This is especially strong considering the impact of the pandemic on cashflow in 2020 and 2021. I would like to thank our team for their hard work in getting both transactions across the finish line in a challenging market environment. Despite the heightened macroeconomic uncertainty over the past two months and the resulting concerns about consumer spending, we have not yet seen a significant impact on our portfolio of results. Based on preliminary results, we estimate that our 30-hotel-same-property portfolio, which now excludes Fairmont Dallas, grew by approximately 3.4% in April as compared to last year, despite the negative impact of the Easter timing shift on the results for the month. Notwithstanding our positive year-to-date results, we have reflected the potential negative impact of this uncertain macroeconomic environment in our outlook for the remainder of the year. Atish will discuss our adjustments to full-year guidance, which incorporate both the impact of our recently completed transactions, as well as modestly greater downside risk to portfolio performance for the balance of the year. We have taken decisive action to reduce our capital expenditures this year in response to the headwinds created by the potential macroeconomic impact, including tariffs on goods sourced internationally. We are also reducing our G&A expenses and continue to work with our hotel operators to be even more disciplined in managing property level expenses. Regarding capital expenditures, we now expect to spend between $75 and $85 million on property improvements during the year. a reduction of $25 million compared to our previous guidance. This is partially the result of avoiding capital expenditures that were planned at Fairmont Dallas in 2025. Additionally, we have elected to defer and modify some projects as we further refine and analyze scope, costs, and ROI expectations for these potential investments. Barry will provide additional details on the $32.4 million we invested during the first quarter and the latest on projects planned for 2025. Although our portfolio is not immune to the pressures created by potential slowdown in consumer spending and overall economic activity, we believe that we will benefit this year from the fact that all of our high-quality branded hotels and resorts are in the luxury and upper upscale segments and cater to customers that may be more resilient than those in the lower quality segments. We also believe that our geographic diversification and Sunbelt focus will once again benefit us as our exposure to inbound international demand and government business is limited We believe that we are well positioned to weather various economic environments with a curated portfolio, strong balance sheets, and experienced management team. And we continue to expect that our high-quality branded portfolio will show meaningful growth and appreciation in the years ahead. Reflecting this view, we increased our quarterly dividend by 17%, and we repurchased 2.7% of outstanding shares during the first quarter. I will now turn the call over to Barry to provide more details on our operating results and our capital projects.