Good day, and welcome to the Xenia Hotels & Resorts First Quarter 2015 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lisa Ramey, Vice President of Finance. Please go ahead.

Thank you. Good morning, everyone, and welcome to the First Quarter 2015 Earnings Call and Webcast for Xenia Hotels & Resorts. I'm here with Marcel Verbaas, our President and Chief Executive Officer; Andy Welch, our Chief Financial Officer; and Barry Bloom, our Chief Operating Officer. Marcel is going to begin by providing you with a quick update on the industry, a discussion of our first quarter results and activities and our outlook for the rest of 2015. Andy will provide additional details on our first quarter performance and our balance sheet. We will then open the call up 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 earlier this morning, along with the comments on this call, are made only as of today, May 14, 2015, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in this morning's earnings release. An archive of this call will be available on our website for 90 days. With that, I'll turn it over to Marcel to get started.

Thanks, Lisa. And welcome, everyone, to our First Quarter Earnings Call. We are excited about this inaugural call and look forward to the future as a now-independent, publicly traded lodging REIT. This quarter has been a busy one for Xenia as we completed our spinoff from InvenTrust Properties, formerly Inland American, and listed on the New York Stock Exchange in early February. We are thrilled with the news that we will be added to the MSCI U.S. REIT Index on May 29. Since listing, we have added several new employees, including most recently, Joe Johnson as our Senior Vice President and Chief Accounting Officer. Joe brings a wealth of accounting, finance, real estate and lodging experience, and we are very pleased we were able to add him to our executive team. We are working diligently to complete the transition from our former parent company and have already terminated several services under our transition services agreement. We feel confident in our ability to terminate the balance of these services before the end of this year. Fundamentals for the lodging industry remain very positive. The first quarter was strong for the U.S. lodging industry in general, with STR reporting occupancy up 3.1% year-over-year and ADR posting a healthy 4.7% gain, which resulted in RevPAR growth of 8%. Turning to our portfolio. We were pleased with our operating results for the first quarter. Our RevPAR growth of 2.6% was comprised of strong ADR growth of 5.1%, which helped offset a decrease in occupancy of 2.3% primarily due to renovation activities during the quarter at 3 of our largest hotels. We did not make any adjustments to our 2014 numbers to account for the adoption of the 11th addition of the Uniform System of Accounts for the Lodging Industry. If we had, we estimate…

Thanks, Marcel. And good morning. Before I get to the numbers, I want to address the difficulty in comparing our operating results for this quarter and the remainder of this year to same periods for 2014. Prior to our listing on the New York Stock Exchange in February, our financial statements were carved out from our former parent's consolidated financial statements and reflect significant assumptions and allocations. These include allocations of corporate overhead costs, certain corporate and shared functions, interest expense and income taxes. In addition, significant costs were incurred in connection with the separation and listing, and we have incurred and will incur onetime costs transitioning to an independent publicly traded company. During 2014, we sold 55 hotels, 52 of which are reflected in our discontinued operations. There have also been reclassifications of revenue and expense line items to other categories. These reclassifications resulted from the 11th edition changes to the uniform system of accounts, which is the financial reporting standard followed by the lodging industry, and other reclassifications detailed in our 10-Q which will be filed later today. In other words, this is going to be a bit of an apples-to-oranges comparison this year. We will do our best this quarter and throughout the year to clarify these items and their impact. As a reminder, our first quarter same-property hotel results include all hotels owned as of March 31, 2015, except for the 2 hotels under development. We have included all properties under renovation, as they remained open during the quarter, but removed a guarantee payment from 1 hotel to better provide a clear picture of hotel-level operating performance. RevPAR growth in our 46-same-property portfolio increased 2.6%, which as Marcel mentioned, was primarily impacted by renovation projects underway at 3 of our largest hotels: the Marriott San Francisco…

[Operator Instructions] And our first question comes from Aaron Meyer of Wexford.

I just wanted to have a couple of answers on the adjusted numbers, so just trying to understand. You talked about outperforming your group across your markets. I just wanted to understand, when you sort of take out the disruption and then take out the reclassification, what you think the sort of overall adjusted RevPAR might be. In sort of the calculations that you've talked about, it's somewhere in the 6s, but is that sort of a fair way to look at it, same on same?

Absolutely, that is the right way to look at it, as we described in our adjustments. The USALI impact was about 100 basis points, and the impact of the renovations was about 300 basis points, so it's fair to say that we would be -- on a comparable basis, would have been in the mid-6 range.

Okay, perfect. The other question I had was you ended up the quarter with a lot of cash on the balance sheet, even more than I thought. Obviously, as a new company, you always want to have a little more flexibility, but it's actually, if you compare yourselves to the peers on your pro forma guidance, you're looking at something like under 3x, so that's way below peers. And you're also at a valuation that's well below peers. So either way I look at this is in either you should either be more aggressively returning capital, or looking at share repurchase, though as a REIT, it may not be the best use of capital. But what I perceive is it looks to me like you should be paying out a lot more cash here, so help me understand how you guys think about that.

Sure. Happy to answer that as well. We obviously, at the end of the first quarter, came on the heels of doing our first quarter tender offer that we did after our listing. The tender offer was undersubscribed, so obviously that resulted in additional cash on our balance sheet as a result of that. We are evaluating various utilizations of the cash, as Andy pointed out, and that obviously includes looking at acquisitions that will be -- would be accretive for the company, as well as other uses of the cash. I mean we've -- clearly, we've set our dividends at a level with a long-term view of being at a prudent payout ratio, so certainly, we intend to be able to maintain that level. But we certainly will look at utilization of cash, whether that is acquisitions that we are pursuing currently, future debt reductions potentially, or also would evaluate whether a stock buyback would be the best use of the cash.

Sorry, just to follow up on that point and just trying to understand the math that you look at when you consider acquisitions versus a higher payout or at least using more of the cash. Given unencumbered assets and a lot of room on your revolver as well, I'm just trying to understand the thought process of not at least returning some amount of that total $320 million of cash and then using a little bit of debt, which seems to make a lot of sense given how low the rates that you could borrow at as well. So just any more commentary on how you think about the balance of capital usage.

No, I think I frankly can't say a lot more than what I've said. I mean, obviously, we're looking at the various uses of the cash. And when you're adding up kind of those numbers, obviously, you're looking at a little -- a lot of different pieces of or parts of the cash balance, including restricted FF&E reserves and those type of things. But as we look at our cash balance, we're absolutely looking at best utilization of such, and I'm sure you will see that here over the next few quarters.

Sorry, but I'll just leave this at this. The reason I say it is because, assuming that you guys have some cash after dividends, you collect enough cash and then you sort of don't have much of a choice when you're at 2x levered and peers -- you're trading at 20% discount to peers, peers who have 4x or 4.5x levered at a much higher valuations, you sort of set yourselves up for takeouts or not having control of your destiny. So that's really why I make that statement.

Understood. I -- we appreciate your questions. Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Marcel Verbaas for closing remarks.

Thank you, operator. I'd like to thank everyone again for joining us for our inaugural call. We, as I've pointed out, are excited about the future. We think that the lodging industry dynamics are very positive today. And we look forward to informing you over the next few quarters of our progress.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.