Inland American Real Estate Trust, Inc. manages a large portfolio of commercial real estate assets with a focus on three asset classes - lodging, multi-tenant retail and student housing. As of September 30, 2014 Inland American owned 203 properties, representing approximately 23.5 million square feet of retail, industrial and office space, 8,313 student housing beds and 12,797 hotel rooms.
Oak Brook, Ill. – Inland American Real Estate Trust, Inc. (“Inland American”) today announced that it has successfully completed the previously announced spin-off of Xenia Hotels & Resorts, Inc. (“Xenia”) through the pro rata taxable distribution of 95% of the shares of Xenia common stock to Inland American’s stockholders. Immediately following the distribution, Inland American will continue to own approximately 5% of the outstanding shares of Xenia. Beginning today, Xenia’s common stock will commence trading on the New York Stock Exchange under the symbol “XHR”.
Frequently Asked Questions in Regards to the Xenia Spin-Off
Q: How many shares of Xenia common stock will I get? How was the ratio determined?
Each Inland American stockholder received one share of Xenia common stock for every eight shares of Inland American common stock they owned as of the close of business on the record date of January 20, 2015. One of the determining factors for the ratio was to meet certain NYSE listing requirements.
Q: Will the separation affect the value of my Inland American shares?
Yes, as a result of the distribution, the value of shares of Inland American stock immediately following the distribution is lower than the value of such shares immediately prior to the distribution because the value of Inland American stock no longer reflect the value of Xenia’s assets and liabilities.
Q: When will the new estimated per share value be announced for Inland American?
We currently plan to publish a new estimated share value within the next few weeks. Once the new estimated share value is determined, we will communicate it to Inland American stockholders.
Q: Is the distribution changing for Inland American?
The Inland American Board is reviewing and will announce a revised dividend and distribution policy in the coming weeks. With Xenia owning all of Inland American’s lodging portfolio, which produced a substantial portion of Inland American’s cash flow from operations, Inland American’s distribution payments will decrease. After giving effect to the spin-off, the aggregate dividends paid by Inland American and Xenia, on a combined basis, will be less than the previous level of distributions paid by Inland American.
Q: How will the Xenia spin-off benefit the stockholder?
The spin-off is providing an opportunity for partial liquidity to Inland American stockholders. As disclosed in the Information Statement, as a stockholder in Xenia, you will be able to make your own investment decisions with respect to the shares that you own. In addition, you will also be able to participate in the potential upside should Xenia make accretive acquisitions or deliver value through other opportunities.
Q: Why is the spin-off taxable?
The operations of Inland American and Xenia did not allow for a tax free spin-off of Xenia. For those stockholders who hold shares in non-qualified accounts, a portion of the distribution will be taxable to the Inland American stockholders, which is consistent with the other spin-off transaction involving a hotel REIT. Stockholders are urged to consult with their tax advisors.
Q: How will the separation affect my tax basis and holding period in shares of Inland American common stock?
As set forth in the Information Statement, your tax basis in shares of Inland American held at the time of the distribution will be reduced to the extent the fair market value of the Xenia shares distributed by Inland American in the distribution exceeds Inland American’s current and accumulated earnings and profits. Your holding period for such Inland American shares will not be affected by the distribution.
Q: Why did stockholders not have the opportunity to vote on the Xenia spin-off?
Inland American is organized under Maryland state law. The distribution of Xenia shares to Inland American stockholders by Inland American did not require a vote of stockholders under its charter or under Maryland law. The fact that a stockholder vote was not required for this transaction saved Inland American the significant expense that would otherwise be required in connection with solicitation of votes, and also avoided the potential time delay that would otherwise be associated with obtaining the required votes.
Q: What are the next steps for Inland American?
We are very pleased to have achieved this milestone, which marks a significant step in Inland American’s long-term strategy. Additionally, having completed the spin-off of Xenia, we will continue to concentrate on refining and growing our multi-tenant retail and student housing platforms.