Giant Inland REIT to spin off lodging portfolio into separate company

Inland American Real Estate Trust Inc., the largest nontraded REIT with nearly $10 billion in assets, has filed with the Securities and Exchange Commission to spin off most of its lodging portfolio into a separate publicly traded company. The new entity, which will be called Xenia Hotels & Resorts Inc. and listed on the New York Stock Exchange under the symbol XHR, is being created as part of Inland's long-term plan to split its holdings into three asset categories: lodging, multi-tenant retail and student housing. (Related: Nontraded REIT liquidity events bring profits, transparency) “Over the past 18 months, Inland American has been implementing its long-term strategy of focusing our portfolio into three asset classes,” said Inland president Thomas McGuinness. “By doing so, we believe we would enhance long-term stockholder value and position Inland American to explore various strategic alternatives designed to provide liquidity events for our stockholders.” The spinoff will structure Xenia as a self-managed real estate investment trust, based in Orlando, Fla., and focus specifically on the lodging sector. At the launch it is expected to own 46 hotels, comprising 12,636 rooms, across 19 states and the District of Columbia. (More: Liquidity events heating up REIT market this summer) Company representatives claim that, as a standalone company, Xenia will be well capitalized and positioned for both internal growth and external growth through acquisitions. Xenia also will have direct access to capital markets to issue equity or debt securities, as well as the flexibility to create a more diverse capital structure. The spinoff is expected to be completed within the next four to eight months. The company has not yet determined how many shares of Xenia common stock existing Inland shareholders will receive, but it is clear that following the spinoff, existing Inland shareholders will own stock in both companies. Inland American shares will not be publicly traded as part of the spinoff project. Earlier this year, Inland American drew the attention of regulators regarding valuations of the REIT shares.