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LaSalle Hotel Properties Reports First Quarter 2013 Results



  LaSalle Hotel Properties Reports First Quarter 2013 Results

   Company reports strong first quarter results with adjusted FFO per share
                             growth of 29 percent

Business Wire

BETHESDA, Md. -- April 17, 2013

LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter
ended March 31, 2013. The Company’s results include the following:

                                                                     
                                                       First Quarter
                                                       2013           2012
                                                       ($'s in millions except

                                                       per share/unit data)
                                                                         
Entire Portfolio (Including Park Central Hotel)
Total Revenue                                          $  191.7       $ 172.3
EBITDA^(1)                                             $  39.8        $ 30.2
Adjusted EBITDA^(1)                                    $  39.8        $ 34.0
FFO^(1)                                                $  25.7        $ 14.0
Adjusted FFO^(1)                                       $  25.7        $ 17.8
FFO per diluted share/unit^(1)                         $  0.27        $ 0.16
Adjusted FFO per diluted share/unit^(1)                $  0.27        $ 0.21
Net loss attributable to common shareholders           $  (7.4)       $ (16.1)
Net loss attributable to common shareholders per       $  (0.08)      $ (0.19)
diluted share
                                                                         
Portfolio excluding Park Central Hotel
RevPAR                                                 $  134.64      $ 128.10
RevPAR growth                                             5.1%
Hotel EBITDA Margin                                       23.1%
Hotel EBITDA Margin growth                                33 bps
                                                                         
Entire Portfolio (Including Park Central Hotel)
RevPAR                                                 $  132.89      $ 128.95
RevPAR growth                                             3.0%
Hotel EBITDA Margin                                       22.2%
Hotel EBITDA Margin growth                                11 bps
                                                                         

 
^(1) See tables later in press release, which list adjustments that reconcile
net loss to earnings before interest, taxes, depreciation and amortization
("EBITDA"), adjusted EBITDA, funds from operations ("FFO"), FFO per
share/unit, adjusted FFO, adjusted FFO per share/unit and hotel EBITDA.
EBITDA, adjusted EBITDA, FFO, FFO per share/unit, adjusted FFO, adjusted FFO
per share/unit and hotel EBITDA are non-GAAP financial measures. See further
discussion of these non-GAAP measures and reconciliations to net loss later in
this press release.
 

First Quarter Highlights

Results excluding Park Central Hotel

  * RevPAR excluding Park Central: Room revenue per available room (“RevPAR”)
    for the quarter ended March 31, 2013 increased 5.1 percent to $134.64, as
    a result of a 1.8 percent increase in average daily rate (“ADR”) to
    $186.97 and a 3.3 percent increase in occupancy to 72.0 percent.
  * Hotel EBITDA Margin excluding Park Central: The Company’s hotel EBITDA
    margin for the first quarter was 23.1 percent, a 33 basis point
    improvement compared to the comparable prior year period.

Entire Portfolio Results

  * RevPAR: RevPAR for the quarter ended March 31, 2013 increased 3.0 percent
    to $132.89, as a result of a 3.9 percent increase in ADR to $186.11 and a
    0.8 percent decrease in occupancy to 71.4 percent.
  * Hotel EBITDA Margin: The Company’s hotel EBITDA margin for the first
    quarter was 22.2 percent, an 11 basis point increase compared to the
    comparable prior year period.
  * Adjusted EBITDA: The Company’s adjusted EBITDA was $39.8 million, an
    increase of 17.1 percent over the first quarter of 2012.
  * Adjusted FFO: The Company generated first quarter adjusted FFO of $25.7
    million, or $0.27 per diluted share/unit, compared to $17.8 million or
    $0.21 per diluted share/unit for the comparable prior year period, an
    increase of 28.6 percent in adjusted FFO per diluted share/unit.
  * Capital Markets: During the quarter, the Company issued 4,400,000 of 6.375
    percent Series I Cumulative Redeemable Preferred Shares. The Company also
    announced the redemption of 4,000,000 of its 7.25 percent Series G
    Cumulative Redeemable Preferred Shares.
  * Capital Investments: The Company invested $16.3 million of capital in its
    hotels, including the following projects:

       * The completion of the guestroom renovations at Hotel Monaco San
         Francisco, Hotel Madera in Washington, DC and Hotel Deca in Seattle,
         WA; and
       * The continuation of the Park Central Hotel and Westhouse renovation
         in New York City.

  * Dividends: On March 15, 2013, the Company declared a first quarter 2013
    dividend of $0.20 per common share of beneficial interest.

“We were pleased with the results of the first quarter,” said Michael D.
Barnello, President and Chief Executive Officer of LaSalle Hotel Properties.
“Our Portfolio’s RevPAR performed in line with our expectations, while
adjusted EBITDA and adjusted FFO were ahead of expectations and grew
substantially year-over-year. Furthermore, we were able to issue preferred
equity at a record low coupon and reduce our overall cost of capital.”

Balance Sheet

As of March 31, 2013, the Company had total outstanding debt of $1.15 billion,
including $51.0 million outstanding on its senior unsecured credit facility.
Total net debt to trailing 12 month Corporate EBITDA (as defined in the
Company’s senior unsecured credit facility) was 3.9 times as of March 31, 2013
and its fixed charge coverage ratio was 3.1 times. For the first quarter, the
Company’s weighted average interest rate was 4.4 percent. As of March 31,
2013, the Company had $37.7 million of cash and cash equivalents on its
balance sheet and capacity of $721.7 million available on its credit
facilities.

Subsequent Events

On April 5, 2013, the Company redeemed 4,000,000 of the 6,348,888 outstanding
7.25% Series G Preferred Shares.

On April 8, 2013, the Company provided notice to the servicer of the $59.9
million mortgage secured by Hotel Solamar of its intent to pay off the
mortgage on June 3, 2013. The mortgage carries an interest rate of 5.49
percent and the Company expects to fund the mortgage pay off with proceeds
from its senior unsecured credit facility, which has an interest rate of 1.95
percent based on the current leverage ratio.

2013 Second Quarter Outlook

Based on the portfolio’s performance quarter-to-date, the Company expects
second quarter RevPAR, excluding the Park Central Hotel, to increase 5.0
percent to 7.0 percent. The Company expects its portfolio, including the Park
Central Hotel, to generate adjusted EBITDA of $90.0 million to $93.0 million
and adjusted FFO per share/unit of $0.70 to $0.73.

2013 Outlook

The Company maintains its 2013 outlook, which was provided in conjunction with
its reporting of 2012 results in February, 2013. The Company’s financial
expectations for 2013 remain as follows:

                                                              
                                                  Current Outlook
                                                  Low-end      High-end
                                                  ($'s in millions except

                                                  per share/unit data)
                                                                   
                                                                   
                                                                   
Excluding Park Central Hotel
RevPAR growth                                        3.0%         6.0%
Hotel EBITDA Margins                                 31.4%        32.4%
Hotel EBITDA Margin Change                           0 bps        100 bps
Including Park Central Hotel
RevPAR growth                                        0.0%         3.0%
Hotel EBITDA Margins                                 31.5%        32.5%
Hotel EBITDA Margin Change                           -50 bps      50 bps
                                                                   
                                                                   
                                                                   
                                                                   
Entire Portfolio (Including Park Central Hotel)
Adjusted EBITDA                                   $  275.0     $  295.0
Adjusted FFO                                      $  195.0     $  214.0
Adjusted FFO per diluted share/unit               $  2.03      $  2.23
Income Tax Expenses                               $  4.5       $  5.5
                                                                   
Capital Investments
Portfolio Excluding Park Central                  $  70.0      $  75.0
Park Central                                      $  60.0      $  70.0
Portfolio Including Park Central                  $  130.0     $  145.0
                                                                   

Earnings Call

The Company will conduct its quarterly conference call on Thursday, April 18,
2013 at 10:00 AM EDT. To participate in the conference call, please dial (888)
663-2254. Additionally, a live webcast of the conference call will be
available through the Company’s website. To access, log on to
http://www.lasallehotels.com. A replay of the conference call will be archived
and available online through the Investor Relations section of
http://www.lasallehotels.com.

LaSalle Hotel Properties is a leading multi-operator real estate investment
trust. The Company owns 40 hotels and a mezzanine loan secured by two hotels
in Santa Monica, CA. The properties are upscale, full-service hotels, totaling
more than 10,600 guest rooms in 13 markets in 9 states and the District of
Columbia. The Company focuses on owning, redeveloping and repositioning
upscale, full-service hotels located in urban, resort and convention markets.
LaSalle Hotel Properties seeks to grow through strategic relationships with
premier lodging companies, including Westin Hotels and Resorts, Hilton Hotels
Corporation, Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt
Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation,
Thompson Hotels, Davidson Hotel Company, Denihan Hospitality Group, the
Kimpton Hotel & Restaurant Group, LLC, Accor, Destination Hotels & Resorts,
HEI Hotels & Resorts, JRK Hotel Group, Inc., Viceroy Hotel Group, Highgate
Hotels and Access Hotels & Resorts.

This press release, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe the Company's
future plans, strategies and expectations, are generally identifiable by use
of the words “will,” "believe," "expect," "intend," "anticipate," "estimate,"
"project" or similar expressions. Forward-looking statements in this press
release include, among others, statements about outlook for RevPAR, adjusted
FFO, adjusted EBITDA and derivations thereof and the Company’s outlook for
capital investments. You should not rely on forward-looking statements since
they involve known and unknown risks, uncertainties and other factors that
are, in some cases, beyond the Company's control and which could materially
affect actual results, performances or achievements. Factors that may cause
actual results to differ materially from current expectations include, but are
not limited to, (i) the Company’s dependence on third-party managers of its
hotels, including its inability to implement strategic business decisions
directly, (ii) risks associated with the hotel industry, including
competition, increases in wages, energy costs and other operating costs,
actual or threatened terrorist attacks, downturns in general and local
economic conditions and cancellation of or delays in the completion of
anticipated demand generators, (iii) the availability and terms of financing
and capital and the general volatility of securities markets, (iv) risks
associated with the real estate industry, including environmental
contamination and costs of complying with the Americans with Disabilities Act
and similar laws, (v) interest rate increases, (vi) the possible failure of
the Company to qualify as a REIT and the risk of changes in laws affecting
REITs, (vii) the possibility of uninsured losses, (viii) risks associated with
redevelopment and repositioning projects, including delays and cost overruns
and (ix) the risk factors discussed in the Company’s Annual Report on Form
10-K as updated in its Quarterly Reports. Accordingly, there is no assurance
that the Company's expectations will be realized. Except as otherwise required
by the federal securities laws, the Company disclaims any obligation or
undertaking to publicly release any updates or revisions to any
forward-looking statement contained herein (or elsewhere) to reflect any
change in the Company’s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.

  For additional information or to receive press releases via e-mail, please
                 visit our website at www.lasallehotels.com.

 
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share data)
(unaudited)
 
 
                                                   For the three months ended
                                                   March 31,
                                                   2013            2012
Revenues:
Hotel operating revenues:
Room                                               $ 126,988       $ 114,692
Food and beverage                                    49,846          44,615
Other operating department                           13,384          11,856   
Total hotel operating revenues                       190,218         171,163
Other income                                         1,486           1,156    
Total revenues                                       191,704         172,319  
Expenses:
Hotel operating expenses:
Room                                                 37,584          33,853
Food and beverage                                    37,304          34,262
Other direct                                         5,022           4,626
Other indirect                                       53,735          48,041   
Total hotel operating expenses                       133,645         120,782
Depreciation and amortization                        33,121          30,152
Real estate taxes, personal property taxes and       12,354          10,811
insurance
Ground rent                                          2,495           1,776
General and administrative                           5,147           4,614
Acquisition transaction costs                        0               3,594
Other expenses                                       641             551      
Total operating expenses                             187,403         172,280  
Operating income                                     4,301           39
Interest income                                      2,369           10
Interest expense                                     (14,017 )       (11,778 )
Loss before income tax benefit                       (7,347  )       (11,729 )
Income tax benefit                                   5,017           2,992    
Net loss                                             (2,330  )       (8,737  )
Noncontrolling interests of common units in          0               22       
Operating Partnership
Net loss attributable to the Company                 (2,330  )       (8,715  )
Distributions to preferred shareholders              (5,065  )       (7,402  )
Net loss attributable to common shareholders       $ (7,395  )     $ (16,117 )
                                                                              

 
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations and Comprehensive Loss - Continued
(in thousands, except share data)
(unaudited)
 
 
                                             For the three months ended
                                             March 31,
                                             2013               2012
Earnings per Common Share - Basic:
Net loss attributable to common
shareholders excluding amounts               $ (0.08      )     $ (0.19      )
attributable to unvested restricted
shares
Earnings per Common Share - Diluted:
Net loss attributable to common
shareholders excluding amounts               $ (0.08      )     $ (0.19      )
attributable to unvested restricted
shares
Weighted average number of common shares
outstanding:
Basic                                          95,166,029         84,499,856
Diluted                                        95,166,029         84,499,856
                                                                              
Comprehensive Loss:
Net loss                                     $ (2,330     )     $ (8,737     )
Other comprehensive income:
Unrealized gain on interest rate               1,519              0           
derivative instruments
Comprehensive loss                             (811       )       (8,737     )
Noncontrolling interests of common units       (5         )       22          
in Operating Partnership
Comprehensive loss attributable to the       $ (816       )     $ (8,715     )
Company
                                                                              

 
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(in thousands, except share/unit data)
(unaudited)
 
 
                                             For the three months ended
                                             March 31,
                                             2013               2012
Net loss attributable to common              $ (7,395     )     $ (16,117    )
shareholders
Depreciation                                   33,011             30,012
Amortization of deferred lease costs           88                 86
Noncontrolling interests of common units       0                  (22        )
in Operating Partnership
FFO                                          $ 25,704           $ 13,959
Pre-opening expenses                           290                125
Acquisition transaction costs                  0                  3,594
Non-cash ground rent                           327                114
Mezzanine loan discount amortization           (591       )       0           
Adjusted FFO                                 $ 25,730           $ 17,792      
Weighted Average number of common shares
and units outstanding:
Basic                                          95,462,329         84,796,156
Diluted                                        95,615,525         84,945,595
FFO per diluted share/unit                   $ 0.27             $ 0.16
Adjusted FFO per diluted share/unit          $ 0.27             $ 0.21
                                              
                                              
                                             For the three months ended
                                             March 31,
                                             2013               2012
Net loss attributable to common              $ (7,395     )     $ (16,117    )
shareholders
Interest expense                               14,017             11,778
Income tax benefit                             (5,017     )       (2,992     )
Depreciation and amortization                  33,121             30,152
Noncontrolling interests of common units       0                  (22        )
in Operating Partnership
Distributions to preferred shareholders        5,065              7,402       
EBITDA                                       $ 39,791           $ 30,201
Pre-opening expenses                           290                125
Acquisition transaction costs                  0                  3,594
Non-cash ground rent                           327                114
Mezzanine loan discount amortization           (591       )       0           
Adjusted EBITDA                              $ 39,817           $ 34,034
Corporate expense                              6,406              5,270
Interest and other income                      (3,855     )       (1,166     )
Hotel level adjustments, net                   (336       )       3,299       
Hotel EBITDA                                 $ 42,032           $ 41,437      
                                                                              

With respect to Hotel EBITDA, the Company believes that excluding the effect
of corporate-level expenses, non-cash items, and the portion of these items
related to unconsolidated entities provides a more complete understanding of
the operating results over which individual hotels and operators have direct
control. We believe property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels and
effectiveness of the third-party management companies operating our business
on a property-level basis.

Hotel EBITDA includes all properties owned as of March 31, 2013 for the
Company's period of ownership in 2013 and the comparable period in 2012.

 
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(in thousands)
(unaudited)
 
 
                                        For the three months ended
                                        March 31,
                                        2013             2012
Revenues:
Room                                    $  126,988       $ 124,204
Food and beverage                          49,846          51,067
Other                                      12,798          12,651
Total hotel revenues                       189,632         187,922
                                                            
Expenses:
Room                                       37,584          36,503
Food and beverage                          37,304          38,869
Other direct                               4,958           4,987
General and administrative                 17,724          17,063
Sales and marketing                        15,093          14,955
Management fees                            5,408           5,148
Property operations and maintenance        8,139           8,092
Energy and utilities                       6,160           6,112
Property taxes                             11,269          10,885
Other fixed expenses                       3,961           3,871
Total hotel expenses                       147,600         146,485
                                                            
Hotel EBITDA                            $  42,032        $ 41,437
                                                            

Note:

This schedule includes operating data for the three months ended March 31,
2013 for all properties owned by the Company as of March 31, 2013. Palomar DC,
L'Auberge and Liberty are shown in 2012 for their comparative period of
ownership in 2013. Hotel EBITDA margin is calculated by dividing hotel EBITDA
for the period by the total hotel revenues for the period.

 
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(unaudited)
 
 
                    For the three months ended
                    March 31,
                    2013            2012
Total Portfolio
Occupancy             71.4   %        72.0   %
Decrease              (0.8   )%
ADR                 $ 186.11        $ 179.19
Increase              3.9    %
RevPAR              $ 132.89        $ 128.95
Increase              3.0    %
                                              

Note:

This schedule includes operating data for all properties owned as of March 31,
2013 for the Company's period of ownership in 2013 and the comparable period
in 2012.

Non-GAAP Financial Measures

FFO, EBITDA and Hotel EBITDA

The Company considers the non-GAAP measures of FFO (including FFO per
share/unit), EBITDA and hotel EBITDA to be key supplemental measures of the
Company's performance and should be considered along with, but not as
alternatives to, net income or loss as a measure of the Company's operating
performance. Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably over time.
Since real estate values instead have historically risen or fallen with market
conditions, most real estate industry investors consider FFO, EBITDA and hotel
EBITDA to be helpful in evaluating a real estate company's operations.

The White Paper on FFO approved by NAREIT in April 2002, as revised in 2011,
defines FFO as net income or loss (computed in accordance with GAAP),
excluding gains or losses from sales of properties, impairment write-downs and
items classified by GAAP as extraordinary, plus real estate-related
depreciation and amortization (excluding amortization of deferred finance
costs) and after comparable adjustments for the Company's portion of these
items related to unconsolidated entities and joint ventures. The Company
computes FFO consistent with standards established by NAREIT, which may not be
comparable to FFO reported by other REITs that do not define the term in
accordance with the current NAREIT definition or that interpret the current
NAREIT definition differently than the Company.

With respect to FFO, the Company believes that excluding the effect of
extraordinary items, real estate-related depreciation and amortization, and
the portion of these items related to unconsolidated entities, all of which
are based on historical cost accounting and which may be of limited
significance in evaluating current performance, can facilitate comparisons of
operating performance between periods and between REITs, even though FFO does
not represent an amount that accrues directly to common shareholders. However,
FFO may not be helpful when comparing the Company to non-REITs.

With respect to EBITDA, the Company believes that excluding the effect of
non-operating expenses and non-cash charges, and the portion of these items
related to unconsolidated entities, all of which are also based on historical
cost accounting and may be of limited significance in evaluating current
performance, can help eliminate the accounting effects of depreciation and
amortization, and financing decisions and facilitate comparisons of core
operating profitability between periods and between REITs, even though EBITDA
also does not represent an amount that accrues directly to common
shareholders.

With respect to hotel EBITDA, the Company believes that excluding the effect
of corporate-level expenses, non-cash items, and the portion of these items
related to unconsolidated entities, provides a more complete understanding of
the operating results over which individual hotels and operators have direct
control. We believe property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels and
effectiveness of the third-party management companies operating our business
on a property-level basis.

FFO, EBITDA and hotel EBITDA do not represent cash generated from operating
activities as determined by GAAP and should not be considered as alternatives
to net income or loss, cash flows from operations or any other operating
performance measure prescribed by GAAP. FFO, EBITDA and hotel EBITDA are not
measures of the Company's liquidity, nor are FFO, EBITDA and hotel EBITDA
indicative of funds available to fund the Company's cash needs, including its
ability to make cash distributions. These measurements do not reflect cash
expenditures for long-term assets and other items that have been and will be
incurred. FFO, EBITDA and hotel EBITDA may include funds that may not be
available for management's discretionary use due to functional requirements to
conserve funds for capital expenditures, property acquisitions, and other
commitments and uncertainties. To compensate for this, management considers
the impact of these excluded items to the extent they are material to
operating decisions or the evaluation of the Company's operating performance.

Adjusted FFO and Adjusted EBITDA

The Company presents adjusted FFO (including adjusted FFO per share/unit) and
adjusted EBITDA, which adjusts for certain additional items including gains on
sale of property and impairment losses (to the extent included in EBITDA),
acquisition transaction costs, costs associated with the departure of
executive officers, costs associated with the recognition of issuance costs
related to the calling of preferred shares and certain other items. The
Company excludes these items as it believes it allows for meaningful
comparisons with other REITs and between periods and is more indicative of the
ongoing performance of its assets. As with FFO, EBITDA, and hotel EBITDA, the
Company’s calculation of adjusted FFO and adjusted EBITDA may be different
from similar adjusted measures calculated by other REITs.

Contact:

LaSalle Hotel Properties
Bruce Riggins or Kenneth Fuller, 301-941-1500
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