July 22, 2002 - LaSalle Hotel Properties today
reported comparable funds from operations ("FFO") of $10.0 million for
the quarter ended June 30, 2002 versus $13.3 million for the second quarter
of 2001. On a per diluted common share/unit basis, comparable FFO for the
second quarter 2002 was $0.52 versus $0.70 a year ago. Comparable FFO is
defined as funds from operations before one-time items, including the purchase
of LaSalle Hotel Lessee ("LHL"), the transition expenses associated with
becoming a self-managed Real Estate Investment Trust ("REIT"), and costs
associated with terminating third-party tenant leases.
For the quarter ended June 30, 2002 versus the same period in 2001,
room revenue per available room ("RevPAR") declined 9.5 percent to $100.84.
The average daily rate ("ADR") of $145.56 represented a 7.4 percent decrease
over the prior year period, while occupancy declined 2.3 percent to 69.3
percent.
"The RevPAR decline for our portfolio in the second quarter was slightly
better than our expectations due to healthy leisure demand at our drive-to-
resorts," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle
Hotel Properties. "In addition, we also benefited from the steady but slow
recovery of the business traveler segment, although we believe it will
be at least another 12 to 15 months before this segment fully recovers."
For the second quarter 2002, the Company experienced net income applicable
to common shareholders of $1.2 million, or $0.06 per diluted common share/unit,
down compared with net income applicable to common shareholders of $3.7
million, or $0.20 per diluted common share/unit, a year earlier. The Company's
comparable EBITDA decreased 15.4 percent to $17.5 million for the second
quarter, compared to $20.7 million a year ago. Comparable EBITDA is defined
as earnings before interest, taxes, depreciation, amortization and one-time
items, including the purchase of LHL, the transition expenses associated
with becoming a self-managed REIT, and costs associated with terminating
third-party tenant leases.
The Company's hotels generated $17.8 million of EBITDA for the second
quarter compared with $20.6 million for the prior year period. Despite
a challenging operating environment, EBITDA margins and operating efficiencies
at the hotels were well maintained during the second quarter, due to tight
control of costs by the hotels' management and LaSalle's asset management
team. Second quarter EBITDA margins across the Company's portfolio declined
approximately 190 basis points from the prior year, despite a RevPAR decline
of 9.5 percent.
This achievement was largely due to well-controlled expenses and operational
improvements in the rooms and food and beverage departments throughout
the Company's portfolio.
Early in the second quarter, the Company commenced the renovation and
repositioning of the remaining two hotels in the D.C. Boutique Collection.
The Hotel Madera and Hotel Helix are currently closed and are expected
to reopen during the fourth quarter of 2002. The project is currently on
schedule and on budget. The total redevelopment costs for the four hotels
in the D.C. Boutique Collection are anticipated to be approximately $31.0
million, with approximately $14.2 million remaining to be spent.
During 2002, the Company anticipates spending a total of approximately
$30.0 million throughout the portfolio, including the $14.2 million to
complete the redevelopments of the Hotel Madera and Hotel Helix. The cost
of guest refurbishments for the Westin conversions at the Dallas and New
Orleans
properties is not included in this amount. The Company still expects
that the Dallas and New Orleans properties will be converted to Westins;
however, due to legal proceedings with Meridien, the anticipated conversions
at both properties have been delayed. The capital investment for conversion
of the properties to Westin remains approximately $6.0 million.
"We maintain our perspective that demand will continue to improve on
a gradual basis throughout the remainder of 2002 and 2003, as corporate
profits and employment improve with an expansion of the economy," said
Mr. Bortz. "Additionally, the capital investments we made throughout
our portfolio, and most recently at our D.C. Boutique Hotels, should contribute
to healthy increases in cash flow as the economy and lodging industry recover.
We continue to remain optimistic that we are entering a new lodging cycle.
Declining hotel supply growth, combined with the enhancements in our hotels'
operating efficiencies should translate into superior returns for our hotels
as the economy improves."
During the second quarter, the Company refinanced the $120.0 million
secured mortgage on the Chicago Marriott Downtown through Cigna Corporation.
The maturity of the loan, which has a term of two years with three one-year
options, was extended until June 2004. LaSalle owns a 9.9 percent interest
in the Chicago Marriott Downtown, and as a result, reflects its pro-rata
share ($11.9 million) of the Chicago Marriott mortgage in its reported
outstanding debt.
"This refinancing extends the maturity of our Chicago Marriott loan
at a very favorable interest rate," advised Hans Weger, Chief Financial
Officer of LaSalle Hotel Properties. "The pricing and terms of the financing
reflect the stability of the property and overall confidence the financing
community has in its long-term cash flows and asset value."
At the end of the second quarter 2002, LaSalle Hotel Properties had
total outstanding debt, including its $11.9 million portion of the joint
venture debt related to the Chicago Marriott, of approximately $258.0 million,
which was down approximately $114.0 million from a year ago. For the quarter,
the Company's corporate EBITDA covered its interest expense by approximately
5.0 times. As of June 30, 2002, the Company had $85.8 million outstanding
on its $210.0 million unsecured credit facility.
"Our efforts to strengthen the balance sheet over the last nine months
have positioned the Company to take advantage of favorable acquisition
opportunities that we expect will heighten over the next 12 to 18 months,"
said Mr. Weger. "Our current capital structure enables the Company
to complete more than $100 million of hotel acquisitions."
On July 15, LaSalle Hotel Properties announced its second quarter 2002
common dividend of $0.01 per common share. The dividend is payable on August
15, 2002 to all common shareholders of record as of July 31, 2002. The
Company paid a preferred dividend of $0.64 per preferred share on July
15, 2002 to all preferred shareholders of record as of July 1, 2002.
2002 Outlook
"We are pleased with our portfolio's operating performance in this challenging
environment and believe the hotel industry will continue its gradual recovery
in the second half of 2002," noted Mr. Bortz. "However, due to the resulting
delay with the Westin conversions at Dallas and New Orleans, as well as
increased challenges in maintaining room rates in some markets, we anticipate
that our annual results will be in the lower half of our previously provided
guidance of comparable FFO of $1.80 to $1.90 per diluted share/unit and
a portfolio RevPAR decline of 2 to 4 percent."
LaSalle Hotel Properties is a leading multi-tenant, multi-operator
REIT, which owns 17 upscale and luxury full-service hotels, totaling approximately
5,900 guestrooms in 13 markets in 11 states and the District of Columbia.
LaSalle Hotel Properties focuses on investing in upscale and luxury full-
service hotels located in urban, resort and convention markets. The Company
seeks to grow through strategic relationships with premier internationally
recognized hotel operating companies including Marriott International,
Inc., Starwood Hotels & Resorts Worldwide, Inc., Radisson Hotels International,
Inc., Crestline Hotels & Resorts, Inc., Outrigger Lodging Services,
Noble House Hotels & Resorts, Hyatt Hotels Corporation, Interstate
Hotels Corporation, and the Kimpton Hotel & Restaurant Group, LLC.
Certain matters discussed in this press release may be deemed to be
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the three months ended June 30,
2002
2001
Revenues:
Hotel operating revenues:
Room revenue
$24,610 $22,450
Food and beverage revenue
13,375
10,229
Other operating department revenue
3,941
3,819
Participating lease revenue
7,682
11,302
Interest income
94
167
Equity in income of joint venture
132
258
Other income
-
95
Total revenues
49,834
48,320
Expenses:
Hotel operating expenses:
Room
5,743
5,045
Food and beverage
9,257
7,157
Other direct
1,943
2,061
Other indirect
11,424
9,780
Depreciation and other amortization
8,285
7,502
Real estate and personal property
taxes and insurance
2,418
2,363
Ground rent
794
1,067
General and administrative
1,412
1,395
Interest
3,487
5,294
Amortization of deferred financing costs
587
551
Writedown of property held for sale
-
1,843
Lease termination, advisory
transaction and subsidiary purchase
expenses
-
5
Other expenses
7
-
Total expenses
45,357
44,063
Income
before minority interest, income tax
expense, discontinued operations and
extraordinary gain
4,477
4,257
Minority
interest in operating partnership (104)
(102)
Income
before income tax expense,
discontinued operations and extraordinary
gain
4,373
4,155
Income
tax expense
(809)
(808)
Income
before discontinued
operations and extraordinary gain
3,564
3,347
Discontinued
operations:
Income on operations of property held
for sale
111
60
Minority interest
(2)
(1)
Income tax benefit
65
-
Net income on discontinued operations
174
59
Income
before extraordinary gain
3,738
3,406
Extraordinary
gain:
Extraordinary gain
-
254
Minority interest
-
(10)
Net extraordinary gain
-
244
Net
income
3,738
3,650
Distributions
to preferred
shareholders
(2,557)
-
Net
income applicable to common
shareholders
$1,181
$3,650
Earnings
per Common Share - Basic:
Income applicable to common shareholders
before discontinued operations
and extraordinary gain
$0.05
$0.19
Discontinued operations
0.01
-
Extraordinary gain
-
0.01
Net income applicable to common
shareholders
$0.06
$0.20
Earnings
per Common Share - Diluted:
Income applicable to common
shareholders before discontinued operations
and extraordinary gain
$0.05
$0.19
Discontinued operations
0.01
-
Extraordinary gain
-
0.01
Net income applicable to common
shareholders
$0.06
$0.20
Weighted
average number common shares outstanding:
Basic
18,680,432 18,356,347
Diluted
18,887,917 18,433,154
LASALLE HOTEL PROPERTIES
Comparable FFO and Comparable EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
For the three months ended June 30,
2002
2001
Comparable
Funds From Operations (FFO):
Net income applicable to common
shareholders
$1,181
$3,650
Depreciation
8,358
7,751
Equity in depreciation of joint venture
243
235
Amortization of deferred lease costs
9
6
Writedown of property held for sale
-
1,843
Minority interest:
Minority interest in operating partnership 104
102
Minority interest in discontinued operations 2
1
Minority interest in extraordinary gain
-
10
Extraordinary gain
-
(254)
Equity in extraordinary loss of
joint venture
150
-
FFO
10,047
13,344
Advisory transition expense
-
-
Lease termination expense
-
5
Subsidiary purchase cost
-
-
Comparable FFO
$10,047 $13,349
Comparable
FFO per common share and unit:
Basic
$0.53
$0.71
Diluted
$0.52
$0.70
Weighted
average number of common shares and units outstanding:
Basic
19,123,615 18,867,762
Diluted
19,331,100 18,944,569
Comparable
EBITDA:
Net income applicable to common
shareholders
$1,181
$3,650
Interest
3,580
5,526
Equity in interest expense of joint venture 138
218
Income tax (benefit) expense:
Income tax expense
809
808
Income tax benefit from discontinued
operations
(65)
-
Depreciation and other amortization
8,379
7,765
Equity in depreciation/amortization of
joint venture
263
250
Amortization of deferred financing costs
596
560
Writedown of property held for sale
-
1,843
Minority interest:
Minority interest in operating partnership 104
102
Minority interest in discontinued
operations
2
1
Minority interest in extraordinary gain
-
10
Distributions to preferred shareholders
2,557
-
EBITDA
17,544
20,733
Advisory transition expense
-
-
Lease termination expense
-
5
Subsidiary purchase cost
-
-
Comparable EBITDA
$17,544 $20,738
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the six months ended June 30,
2002
2001
Revenues:
Hotel operating revenues:
Room revenue
$40,264 $34,104
Food and beverage revenue
21,889
16,153
Other operating department
revenue
6,020
5,255
Participating lease revenue
16,157
24,043
Interest income
184
438
Equity in income of joint venture
35
139
Other income
12
186
Total revenues
84,561
80,318
Expenses:
Hotel operating expenses:
Room
10,480
8,293
Food and beverage
15,868
12,037
Other direct
3,442
3,171
Other indirect
20,120
16,159
Depreciation and other amortization
16,636
14,579
Real estate and personal property
taxes and insurance
4,833
4,644
Ground rent
1,627
1,974
General and administrative
3,067
2,794
Interest
7,963
10,398
Amortization of deferred financing costs
1,154
891
Writedown of property held for sale
-
1,843
Lease termination, advisory transaction and
subsidiary purchase expenses
-
1,923
Other expenses
7
3
Total expenses
85,197
78,709
Income
(loss) before minority
interest, income tax benefit
(expense), discontinued operations and
extraordinary loss
(636)
1,609
Minority
interest in operating partnership (17)
(45)
Income
(loss) before income tax
benefit (expense), discontinued
operations and extraordinary loss
(653)
1,564
Income
tax benefit (expense)
1,288
(32)
Income
before discontinued
operations and extraordinary loss
635
1,532
Discontinued
operations:
Income on operations of property
held for sale
674
750
Minority interest
(15)
(22)
Income tax benefit
48
-
Net income on discontinued operations
707
728
Income
before extraordinary loss
1,342
2,260
Extraordinary
loss:
Extraordinary loss
-
(973)
Minority interest
-
28
Net extraordinary loss
-
(945)
Net
income
1,342
1,315
Distributions
to preferred shareholders (3,296)
-
Net
income (loss) applicable to common
shareholders
$(1,954) $1,315
Earnings
per Common Share - Basic:
Income (loss) applicable to common
shareholders before discontinued
operations and extraordinary loss
$(0.14)
$0.08
Discontinued operations
0.04
0.04
Extraordinary loss
-
(0.05)
Net income (loss) applicable to
common shareholders
$(0.10)
$0.07
Earnings
per Common Share -
Diluted:
Income (loss) applicable to common
shareholders before discontinued
operations and extraordinary loss
$(0.14)
$0.08
Discontinued operations
0.04
0.04
Extraordinary loss
-
(0.05)
Net income (loss) applicable to
common shareholders
$(0.10)
$0.07
Weighted
average number common shares outstanding:
Basic
18,679,391 18,250,968
Diluted
18,854,772 18,333,257
LASALLE HOTEL PROPERTIES
Comparable FFO and Comparable EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
For the six months ended June 30,
2002
2001
Comparable
Funds From Operations
(FFO):
Net income (loss) applicable to
common shareholders
$(1,954) $1,315
Depreciation
16,968
15,064
Equity in depreciation of joint venture
484
463
Amortization of deferred lease costs
16
25
Writedown of property held for sale
-
1,843
Minority interest:
Minority interest in operating partnership
17
45
Minority interest in discontinued operations 15
22
Minority interest in extraordinary loss
-
(28)
Extraordinary loss
-
973
Equity in extraordinary loss of joint venture 150
-
FFO
15,696
19,722
Advisory transition expense
-
600
Lease termination expense
-
790
Subsidiary purchase cost
-
533
Comparable FFO
$15,696 $21,645
Comparable
FFO per common share and unit:
Basic
$0.82
$1.15
Diluted
$0.81
$1.15
Weighted
average number of common shares and units outstanding:
Basic
19,122,575 18,793,907
Diluted
19,297,955 18,876,196
Comparable
EBITDA:
Net income (loss) applicable to
common shareholders
$(1,954) $1,315
Interest
8,200
10,863
Equity in interest expense of
joint venture
275
473
Income tax (benefit) expense:
Income tax (benefit) expense
(1,288)
32
Income tax benefit from
discontinued operations
(48)
-
Depreciation and other amortization
17,008
15,103
Equity in
depreciation/amortization of joint venture 519
493
Amortization of deferred financing costs
1,172
910
Writedown of property held for sale
-
1,843
Minority interest:
Minority interest in operating partnership
17
45
Minority interest in discontinued
operations
15
22
Minority interest in extraordinary loss
-
(28)
Distributions to preferred shareholders
3,296
-
EBITDA
27,212
31,071
Advisory transition expense
-
600
Lease termination expense
-
790
Subsidiary purchase cost
-
533
Comparable EBITDA
$27,212 $32,994
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
For the For the For the For the
three three six
six
months months months months
ended ended ended
ended
June 30, June 30, June 30, June 30,
2002 2001 2002
2001
Occupancy 69.3% 70.9%
63.8% 68.3%
Increase/(Decrease) (2.3%)
(6.6%)
ADR
$145.56 $157.22 $142.48 $151.32
Increase/(Decrease) (7.4%)
(5.8%)
REVPAR
$100.84 $111.48 $90.88 $103.34
Increase/(Decrease) (9.5%)
(12.1%)
Note:
If a property was closed in either 2001 or 2002, its operating
results are excluded for the corresponding months in both the
2001 and 2002 reporting periods. Additionally, this schedule
includes the operating data for the four properties leased to
third parties and the Company's 9.9% interest in The Chicago
Marriott Downtown joint venture.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(unaudited, in thousands)
For the Three For the Six
Months Ending Months Ending
June 30, June 30, June 30, June 30,
2002 2001 2002
2001
Revenues
Room
39,786 44,112 74,083 84,268
Food
& beverage
18,646 19,203 33,004 34,928
Other
5,653 6,087 9,365 10,071
Total hotel sales
64,085 69,402 116,452 129,267
Expenses
Room
9,204 9,772 17,834 19,698
Food
& beverage
12,930 13,989 23,880 26,386
Other
direct
2,732 2,896 4,827 5,021
General
& administrative
14,315 14,851 27,824 30,412
Management
fees
2,827 3,234 4,040 4,939
Fixed
expenses
4,273 4,040 8,295 8,049
Total hotel sales
46,281 48,782 86,700 94,505
EBITDA
17,804 20,620 29,752 34,762
Note: If a property was closed in either 2001 or 2002, its operating
results are excluded for the corresponding months in both the 2001 and
2002 reporting periods. Additionally, this schedule includes the
operating data for the four properties leased to third parties and the
Company's 9.9% interest in The Chicago Marriott Downtown joint venture. |
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