Xenia Hotels & Resorts (XHR) risk factors, FY2025 10-K

Risks Related to the Hotel Industry

1. 01We may be adversely affected by various operating risks common to the lodging industry, including a dependence on business travel and tourism
2. 02Risks relating to natural or man-made disasters, weather and climate-related events, contagious diseases, such as the COVID-19 pandemic, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our financial condition and results of operations
3. 03An adverse change in economic conditions may negatively affect the lodging industry
4. 04The lodging industry is highly cyclical in nature27% rewritten
5. 05We operate in a highly competitive industry37% rewritten
6. 06owners seeking to sell to us, making it more difficult for us to acquire new properties on attractive terms or on the terms contemplated in our business strategyNew
7. 07Changes in distribution channels, including the increasing use of intermediaries by consumers and companies may adversely affect our profitability

Risks Related to Our Business and Strategy

1. 08The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families
2. 09We have a concentration of hotels in California, Texas and Florida, which exposes our business to the effects of regional events and occurrences
3. 10Our long-term growth depends in part on successfully identifying and consummating acquisitions of additional hotels and the failure to make such acquisitions could materially impede our growth
4. 11We may be subject to unknown or contingent liabilities related to recently acquired hotels and the hotels that we may acquire in the future or hotels recently divested or that we may divest in the future, which could materially and adversely affect our revenues and profitability
5. 12The acquisition and/or disposition of a hotel or a portfolio of hotels is typically subject to contingencies, risks, and uncertainties, any of which may cause us to be unsuccessful in completing the acquisition and/or disposition
6. 13Many real estate costs and certain hotel operating costs are fixed, even if revenue from our hotels decreases

Risks Related to the Real Estate Industry

1. 14There are inherent risks with investments in real estate, including the relative illiquid nature of such investments

Operational Risks

1. 15The land underlying certain of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected24% rewritten
2. 16We will not recognize any increase in the value of the land subject to our ground leases and may only receive a portion of compensation paid in any eminent domain proceeding with respect to the hotel
3. 17We or our third-party management companies are subject to operating agreements; if we or our third-party management companies are found to be in breach of these agreements or unable to renew these agreements, we could be materially or adversely affectedNew
4. 18Several of our hotels are subject to condominium regimes or master associations with conditions, covenants, and restrictions placed on our properties; therefore, we are subject to risks associated with this type of real estate ownership
5. 19Any difficulties in obtaining capital necessary to make required periodic capital expenditures and renovation of our hotels could materially and adversely affect our financial condition and results of operations
6. 20Operating expenses may increase in the future, which may cause our cash flow and our operating results to decrease
7. 21Adverse judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could reduce our profits or limit our ability to operate our business
8. 22We are dependent on the performance of the third-party hotel management companies that manage the operations of each of our hotels and could be materially and adversely affected if such third-party managers do not properly manage our hotels or otherwise act in our best interests
9. 23Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability
10. 24Contractual and other disagreements with or involving third-party hotel management companies and franchisors could make us liable to them or result in litigation costs or other expenses
11. 25If we are unable to maintain good relationships with third-party hotel managers and franchisors, profitability could decrease and our growth potential may be adversely affected
12. 26Costs associated with, or failure to maintain, brand operating standards may materially and adversely affect our results of operations and profitability

Technology and Information Systems Risks

1. 27We are increasingly dependent on information technology, and subject to cybersecurity attacks and other threats to the confidentiality, integrity and availability of our critical third-party IT systems and dataNew
2. 28We and certain of our third-party hotel management companies (and certain of their vendors) have experienced cyberattacks and security incidents, and we expect that attacks and incidents will continue in the future to varying degreesNew
3. 29A failure to keep pace with developments in technology could impair our operations or competitive positionNew

Risks Related to Debt Financing

1. 30Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur44% rewritten
2. 31find acceptable, we likely will have to reduce the number of properties we can purchase, and the return on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance indebtedness which is maturingNew
3. 32Our organizational documents have no limitation on the amount of indebtedness we may incur. As a result, we may become highly leveraged in the future, which could materially and adversely affect us
4. 33If we are unable to repay or refinance our existing debt, we may be unable to increase distributions to our stockholders and our share price may be adversely affected
5. 34Borrowings may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans
6. 35If we are unable to borrow at favorable rates, we may not be able to acquire new properties
7. 36Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders
8. 37Existing and future debt agreements contain or may contain restrictions that limit our flexibility in operating our business72% rewritten
9. 38distributions to our stockholders (including, potentially, to make distributions necessary to allow us to maintain our qualification as a REIT for U.S. federal income tax purposes)New
10. 39We may be unable to satisfy our debt obligations upon a change of control
11. 40Covenants applicable to current or future debt could restrict our ability to make distributions to our stockholders and, as a result, we may be unable to make distributions necessary to qualify as a REIT, which could materially and adversely affect us
12. 41Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders
13. 42We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition
14. 43To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective
15. 44The swaps regulatory provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act could have an adverse effect on our interest rate hedging activities

Risks Related to Our Status as a REIT

1. 45Failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would materially increase our expenses and could impair our ability to expand our business and raise capital and reduce potential distributions to stockholders
2. 46Even if we continue to qualify as a REIT, we may face other tax liabilities that reduce our cash flows
3. 47Failure to make required distributions would subject us to U.S. federal corporate income tax
4. 48REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds or sell assets during unfavorable market conditions
5. 49The ownership of our TRS and our TRS lessees increases our overall tax liability
6. 50Our TRS lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to stockholders
7. 51Our ownership of our TRS, and any other TRSs we form, will be subject to limitations and our transactions with our TRS, and any other TRSs we form, will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms
8. 52If the leases of our hotels to our TRS lessees are not respected as true leases for U.S. federal income tax purposes, we may fail to qualify as a REIT
9. 53If any of our current and future hotel management companies do not qualify as "eligible independent contractors," or if our hotels are not "qualified lodging facilities," we may fail to qualify as a REIT
10. 54Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities
11. 55We may face risks in connection with Section 1031 Exchanges
12. 56The prohibited transactions tax may limit our ability to engage in transactions, including dispositions of assets that would be treated as sales for federal income tax purposes
13. 57We may pay taxable dividends in cash and our common stock, in which case stockholders may sell shares of our common stock to pay tax on such dividends, placing downward pressure on the market price of our common stock
14. 58Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends
15. 59Complying with REIT requirements may limit our ability to hedge effectively
16. 60The ability of our Board of Directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders

Risks Related to Our Common Stock

1. 61You may be restricted from acquiring or transferring certain amounts of our common stock
2. 62The stock ownership restrictions of the Code for REITs and the 9.8% stock ownership limit in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities
3. 63We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock
4. 64The market price of our shares may fluctuate widely and there can be no assurance that the market for our stock will provide you with adequate liquidity
5. 65Significant sales of our common stock, or the perception that significant sales of such shares could occur, may cause the price of our common stock to decline significantly
6. 66Future sales or distributions of our common stock may negatively affect the market price of our common stock
7. 67Your percentage ownership in us may be diluted in the future
8. 68The amount and frequency of our share repurchases may fluctuateNew
9. 69If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline
10. 70Increases in market interest rates may reduce demand for our common stock and result in a decline in the market price of our common stock

Risks Related to Our Organization and Corporate Structure

1. 71Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit our stockholders’ recourse in the event of actions not in our stockholders’ best interests
2. 72Certain provisions of Maryland law could inhibit changes in control
3. 73As a holding company with no direct operations, we rely on funds received from our Operating Partnership to pay liabilities
4. 74Our charter places limits on the amount of common stock that any person may own
5. 75Our charter permits our Board of Directors to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third-party from acquiring us
6. 76Our conflict of interest policy may not be successful in eliminating the influence of future conflicts of interest that may arise between us and our directors, officers and employees
7. 77Conflicts of interest could arise in the future between the interests of our stockholders and the interests of any holders of Operating Partnership Units in our Operating Partnership, which may impede business decisions that could benefit our stockholders
8. 78Certain provisions in the partnership agreement for our Operating Partnership may delay or prevent unsolicited acquisitions of us
9. 79Our Board of Directors may change our investment policies without stockholder approval, which could alter the nature of your investment
10. 80Our Board of Directors may approve very broad investment guidelines and has approved investment and financing guidelines for us. Our Board of Directors may not always review or approve each investment or financing decision made by our senior management team

General Risks

1. 81The departure of any of our key personnel who have significant experience and relationships in the lodging industry could materially and adversely impede or impair our ability to compete effectively and limit future growth prospects
2. 82Compliance or failure to comply with the Americans with Disabilities Act and other safety regulations and requirements could result in substantial costs
3. 83We could incur significant, material costs related to government regulation and litigation with respect to environmental matters, which could materially and adversely affect our revenues and profitability as well as limit or slow our future growth
4. 84Increasing attention to, and evolving expectations for, environmental, social, and governance matters may increase our costs, harm our reputation, or otherwise adversely impact our business50% rewritten
5. 85Uninsured and underinsured losses at our hotels could materially and adversely affect our revenues and profitability
6. 86Market disruptions may adversely impact many aspects of our operating results and operating condition